Australian Dollar being driven lower by China
The eyes of the world are focused on Greece. This week its’ people went to the polls to decide their financial future. It’s a tragic turn of events that has the potential to undermine confidence in Europe. But in my opinion China is a much bigger story. Indeed - much of the recent selloff in Australia is being driven by the correction in the mainland Chinese share market.
But first to Greece where the Greek referendum will have little immediate impact on the country’s situation. People still have access to limited cash. Bank’s cash reserves look like they’ll run out very soon.
Political leaders now go straight back to the negotiation table – this assumes the creditors will meet with Greece.
- sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
Published on 07 Jul 15
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The eyes of the world are focused on Greece. This week its’ people went to the polls to decide their financial future. It’s a tragic turn of events that has the potential to undermine confidence in Europe. But in my opinion China is a much bigger story. Indeed - much of the recent selloff in Australia is being driven by the correction in the mainland Chinese share market.
But first to Greece where the Greek referendum will have little immediate impact on the country’s situation. People still have access to limited cash. Bank’s cash reserves look like they’ll run out very soon.
Political leaders now go straight back to the negotiation table – this assumes the creditors will meet with Greece.Sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
-
Venezuela tension heats up
Duration 03:16
-
Aussie dollar surprises market
Duration 03:10
-
Markets climb as investors watch US healthcare bill
Duration 02:31
But first to Greece where the Greek referendum will have little immediate impact on the country’s situation. People still have access to limited cash. Bank’s cash reserves look like they’ll run out very soon.
Political leaders now go straight back to the negotiation table – this assumes the creditors will meet with Greece.
If a deal isn’t reached quickly, and the ECB doesn't provide more emergency liquidity, authorities might be forced to issue a parallel currency to survive.
But if you ask me, China is the bigger global story. The Shanghai Composite Index has had its steepest three-week decline since 1992 and has now fallen nearly 30 per cent since mid June.
China's authorities are struggling to arrest the slump. They are responding with knee-jerk policies – targeting short sellers and providing liquidity to the market.
The risk now is that the market turmoil destabilises China's economy at a time when it is already showing signs of a slowdown.
There are also signs that the Chinese market turmoil is beginning to reverberate beyond China. For example, the Australian Dollar - which often trades as a proxy for Chinese growth - is down to a six year low.
But China isn’t the only force driving down the little Aussie battler. Poor retail sales data in Australia has also helped pushed the Australian Dollar down against the US Dollar. It fell even lower against the Euro and Pound Sterling.
Against this backdrop, and following the release of mixed economic data during the past four weeks, the RBA has left interest rates on hold at 2.0% this month.