My focus on AUD/USD is paying off. As expected, HSBC China Manufacturing PMI remained below 50.0, which indicates the economy is still contracting. A slowdown in China means it may purchase less goods from Australia, denting the AAA Australian sovereign rating. The Australian dollar (AUD) is expected to weaken against a basket of currencies on the fears that the Reserve Bank of Australia (RBA) will act and cut rates to counter the slowdown in China at the next monetary policy. The main trigger for Aussie-selling was a decline in China cola imports.
GoldXAU/USD (gold) posted heavy losses as a result of the HSBC Manufacturing PMI. This was also expected as I outlined in my analysis. Despite the Fed's QE3, the weakness in gold and AUD are expected to continue throughout the upcoming months.
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