The impact of poor housing data released from China was felt by a number of currencies. The Australian dollar, having declined at the end of last week, weakened further. The figures from China triggered a decline in global iron ore prices – a significant export commodity of Australia – and the result was the biggest decline in Australian government bond yields in over a week. Traders are nervous that growing Chinese stockpiles on iron ore could substantially drive down the price of the steelmaking material.
Conversely, we saw the Japanese yen rally early in the day yesterday as the news from China hiked up demand for safe-haven assets. Some of these gains were eradicated in the afternoon, however, as we saw a flow into North American equities instead.
A quiet day on the data-release front today means that these markets could be impacted by news from elsewhere.
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