Watch USD/CNH to gauge AUD/USD direction

By FXStreet FXStreet (Bali) – One of the key pairs any Australian trader should place on top of their list as long China continues to drive the markets is USD/CNH (offshore Yuan).

As it’s well known, the Yuan devaluation has caused a rout in equities and commodities, including the Australian Dollar. While it’s critical to monitor the PBOC 1.15GMT fix, with any Yuan devaluation to impact the Aussie negatively, the action afterwards in USD/CNH it’s as important, in order to understand AUD intrinsic value.

During Monday, the dominant factor allowing equities to recover off lows, thus providing support to the Aussie to temporarily move above 0.70, was the strong decline in USD/CNH, which led to a recovery in sentiment. Since the US close, however, USD/CNH has traded higher by around 0.30/35% to 6.6045, keeping the Aussie under slight pressure.
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Source:: FX Street