A: The market assumes that tighter Chinese monetary policy will slow Chinese growth, reduce demand for commodities which leads to lower commodity-linked currencies like Aud….In reality, the market is just very long of EUR, AUD, etc….so the event is prompting pent-up profit-taking more than it is shifting the macro economic landscape.
It is akin to yelling fire in a crowded theater. People stampede for the exits whether or not there is a fire…
