A$ Sees Negative Spill Over From China Equity Losses

AUD/USD is close to session lows, around 0.6330, which is -0.75% for the session so far. After JPY & SEK, AUD is the weakest performer within the G10 space. Late last week, dips sub 0.6230 generated support. On the topside, note the 20-day EMA comes in at 0.6385.

• NZD is also lower, but the A$ is still underperforming. The AUD/NZD cross back below 1.1050 (last 1.1045/50).
• Spill over from negative China/HK sentiment has been evident. Sharp losses in the HSI China enterprise index have been notable (~5%), which has trimmed around 1% off US Emini futures.
• China data was mixed, although positive IP growth/better imports hasn't impact sentiment a great for the A$. China iron ore imports were up 3.6% in September, but are still down in y/y terms.
• Commodities have been relatively quiet, although iron ore is down from earlier highs ($93/tonne), back to $91/tonne.
• Earlier comments from RBA Assistant Governor Kent didn't suggest a great deal of alarm around current FX levels, highlighting the TWI is more important for imported inflation pressures. The preliminary services PMI for October also slipped into contractionary territory.
• The domestic focus now shifts to Tuesday evening's budget update, followed by Q3 CPI Wednesday.