AUD/USD at times this week seems to have defied gravity gaining across the field as EUR/USD succumbed to the PIIGS woes. Well today is catch-up day – the metal sell-off that flowed through to crude, precious metals and stocks is finally taking its toll on AUD/USD. Perhaps last nights NY close below parity was a sign of things to come. If we are moving into square up mode than AUD/USD could be back at 95 cents in a jiffy.
Todays China tightening story which is true but appears to be a rehash of a Reuters story run on Wednesday where despite hiking the RRR by 50bps at all banks, some were asked to increase their RRR by more. Obviously the PBOC can use the RRR lever quickly – any other decision like a rate hikes are made by other more important beings.
