Chinese markets have been closed all week for lunar New Year celebrations but they re-open today and that could add volatility to Asia-Pacific markets.
Expect Chinese shares to sell-off in recognition of the declines in global markets since the end of January. FXI, the main ETF that tracks China is down 1.8% this week so that serves as a rough guide. Many traders have likely extended holidays through the weekend so that could lead to some choppy moves.
The swings are most-likely to be felt in Australian dollar trading. AUD/USD has been somewhat muted since yesterday’s sharp rally on the RBA. The pair has ‘wedged’ slightly which is often a continuation pattern (higher in this case). The lack of any kind of significant retracement is also a bullish signal, even when risk appetite waned earlier in the day.
AUDUSD technical analysis
A final event to watch is economic data. At 0030 GMT, Australia releases December retail sales and the trade balance. Australian economic data has been coming in soft, outside of inflation.
