The Australian dollar is under-performing as we approach the NA session, as fears over Chinese growth continue to weigh on the commodity exporter.
Eric Theoret at Scotiabank says:
"AUD has fallen back to support at 1.0400, the 200 day MA, having fully retraced the post‐Bernanke rally gains from Monday.
"AUDUSD will continue to trade on broader market sentiment ahead of the RBA meeting on April 3rd, where policymakers are expected to maintain policy at 4.25%.
"Lastly, the RBA has released its financial stability review and noted that reduced demand for debt on the part of consumers will reduce profit potential for domestic banks."
The RBA cautioned that lenders should not take excessive risk in order to chase lost profits. Australia’s financial sector remains vulnerable to increases in wholesale funding costs, a fact that has been noted by rating agencies and reflected through downgrades over the past 12 months.
Looking elsewhere on the currency markets we note that performance among the majors is mixed and generally limited as we approach the NA session, with SEK outperforming on better confidence figures and NOK trading in sympathy.
EUR is up following the release of France’s as‐expected Q4 GDP figures, while JPY remains somewhat stronger. Meanwhile, AUD, and NZD are down as
commodities are weak. CAD is down slightly, in contrast to equity futures that are pointing to a positive open.