China and commodities cloud AUD outlook

AUD/USD fell for a third successive month in August but this may not be the end of it as long as worries over China growth (imports) do not dissipate and commodity prices do not stabilise. EUR/AUD traded a high of 1.6590. A break below 0.7000 puts AUD/USD back in post-Lehman territory (0.60-0.70), but IMM specs are still lagging the latest pullback. The RBA left its key interest rate unchanged at 2.0% on 1 September for a fourth successive meeting.  

The unemployment rate rose to 6.3% in July, a six-month high. The trade deficit narrowed to A$2.46bn from A$3.05bn in June thanks to a 2% rise in exports (gold exports up strong, iron ore and coal down). Exports to China were virtually stable.