AUD collapses as Chinese stocks crash
AUD/USD is down more than 250 pips (-4.0%) year-to-date Wednesday as the Chinese stock market nears lowest prices since the financial crisis of 2008.
Key points
- AUD/USD traded below 0.6550 Wednesday morning for the first time since mid-December
- Chinese large cap stocks (FXI) tumbled below $21.50 - nearing 15-year lows of $20.95
- AUD/USD has lost 269 pips from January 1st (as of Wednesday)
AUD/USD Price analysis
AUD/USD started Wednesday down 143 pips over the previous three trading days as Chinese stocks continue to slide. Australian dollar hit a 5-month high against USD in late December above 0.6840 and has been falling since.
Recent moves have also corresponded with the falling price of Gold - a commodity historically correlated with Australian dollar.
FXI price history
FXI (iShares China Large-Cap ETF) tracks the Chinese stock market much like the S&P 500 tracks the US. Wednesday morning, the ETF fell to $21.30 as China struggles to regain its pre-pandemic growth. At $21.30, the ETF is less than 50 cents from its 15-year low of $20.95.
Australian dollar has shared historic correlations with both Chinese stocks and Gold in recent years. China remains Australia's largest exporter - causing the two economies, and currencies, to often move in tandem. Falling Gold prices may be adding to the decline in AUD, as Australia is widely known for its gold reserves and production.
Price data as of 1/17/24
How to trade AUD/USD
- Open an account to get started, or practice on a demo account
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- Open, monitor, and close positions on AUD/USD
Trading forex requires an account with a forex broker like IG. AUD/USD can be found in the "Major" pairs tab. Many traders watch other major forex pairs like GBP/USD and USD/JPY for potential opportunities based on economic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.
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