Global markets were affected by concerns in China this week as Shanghai Chaori Solar Energy Science & Technology Co. became the first Chinese entity to default in China’s onshore bond market.
As a result, the solar-maker saw its securities halted, speculation mounted that the bonds may be delisted altogether. This caused stocks and commodities to drop mildly across the board and caused traders to wonder how many more underfunded companies lurk within the Chinese bond markets.
As we move into Thursday, risk-on markets are mostly back in the green, however.
NZD/USD
Away from China, and the Reserve Bank of New Zealand acted as expected on Wednesday by raising interest rates to 2.75%, sending the kiwi higher against most of its trading partners. It was not one way traffic, however, as NZD/USD actually lost around 30 pips just as the announcement was made. Concerns over the exchange rate from Governor Wheeler prompted the drop but this was ultimately overcome, in the end, by the upbeat economic guidance.
Nevertheless, the uncertain price pattern suggests NZD/USD could be nearing a short term top soon.
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AUD/USD
Over in Australia, the Aussie dollar is currently trading higher after the Australian labor market improved significantly in February.
At the time of writing, AUD/USD is up by 0.81%, following the better than expected employment report, taking the currency through the 0.905 handle and above the second resistance mark.
According to official figures, the Australian economy added 47,000 jobs in February, substantially higher than the revised January number of 18,000, meanwhile the underlying unemployment rate stayed at 6.0%. That’s 0.2% higher than December’s number and still the highest level since 2003.
Taking into account the advance on the better than expected jobs numbers, AUD/USD is nearing an overbought status on the short term horizon as it passes the main resistance points.
Traders should give the market time to absorb the good news but should refrain from going long until the market falls back towards an important level such as 0.90.
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