The Aussie and the Chinese Yuan amid the slow economic growth in China

The Aussie and the Chinese Yuan amid the slow economic growth in China 

There is an interrelated relation between China and Australia known as “Sino Australian relation as they are engaged economically. Today China is Australia largest trading partner. Therefore any negative Chinese economic data will have negative impacts on the volatility of the Aussie.

Yesterday Feb 25, 2014 the Aussie eased after the sharp fall of Chinese Yuan.Also On Tuesday, the Australian dollar dropped below 0.90 level following the falling of the Chinese Yuan due to slowdown economy in China, which retreated from 7.8% in the third quarter to 7.7% (YoY) in the fourth quarter.

Furthermore, in the previous week, a survey showed that China’s manufacturing activity at seven-month low as economic growth in China slowdown and recent indicators have showed weakness, particularly purchasing-managers indexes (PMI), which fall from 49.5 in January to 48.3 in February, the lowest since July. And  it raised investors concerns about fragility in China's huge manufacturing industry.

On the other hand, European stocks slipped from a six-year high , while the Japanese yen strengthened on concern a weakening in China’s yean will hurt growth.  The Yuan weakened 0.5 percent, the lowest level since November 2010, and the Shanghai Composite Index decreased 2 percent.
Another reason of economic slowdown is that banks in China have reduced real-estate loans, signaling slower demand growth from the world’s second largest economy.
All the above stated Chinese economic factors have affected the Australian dollar which was trading lower against its US counterpart on Monday, following its first weekly loss in four weeks, after the decrease of New Homes in China, as Australia’s largest export market.

For this reason, the growing worries of the investors provoked an aversion from investing in the Chinese market as well as most other emerging markets, and they preferred to invest in Precious metals and to buy the Japanese yen as a safe haven currency.

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