During Thursday’s trading session, the aussie was outperformed by every other major currency. So far, the main reason seems to be that demand for raw materials is likely to fall as the Chinese economy grew at a slower speed than expected.
“Commodities make up the biggest percentage of the Australian export market. As such, the aussie is very vulnerable to any change in the raw materials demand outlook.” TheLFB-Forex.com Trade Team members said. “Raw material exports make up 35% of the balance of payments. Additionally, out of the top 10 merchandises exported by Australia, seven are raw commodities.” they added.
To further strengthen the case, China is the largest export market for Australian exports, so it is easy to understand why the weaker than expected Chinese Q1 GDP had the strongest effect over the Australian currency.
The Australian dollar lost 80 pips against the greenback, after managing to break above this week's high during Thursday’s Asian session, while it lost 85 pips against the yen. However, the aussie’s positive days are far from over. The currency will rally when the commodity market actually starts moving higher, and after gold finds a base. The yellow metal traded at a major support area of 875 on Thursday, and a bounce higher from there may initiate interest in the aussie once more.