AUD on its Knees, GBP Flat After Polls

The Australian dollar is threatening to break 0.9000 early in the week after a round of soft Chinese data and a report that officals are reluctant to cut rates. The aussie was also the best performer last week while US dollar edged out the euro as the top performer. CFTC data showed cable traders leaning toward a No vote.

The early-week story is a quarter-cent slide in the Australian dollar after a round of softer Chinese data. Retail sales were expected up 12.1% y/y but rose just 11.9%. The larger miss was in industrial production as it rose just 6.9% y/y compared to 8.8% expected.

Compounding the softness was a report from MNI that said the PBCO is reluctant to ease the the reserve requirement further because two targeted cuts earlier this year failed boost small businesses and rural areas.

AUD/USD fell as low as 0.9003 in early trading -- the lowest March 19. The pair has now fallen hard in six straight sessions in a swan dive after a failed push to 0.9400.

The focus of many traders is the pound after a mixed bag of weekend polls. The largest polls showed a 6-7 point lead for the No side, which rejects independence. But an internet poll with a small sample of 705 people from ICM showed the Yes side with a 54% to 46% lead.

GBP/USD is virtually unchanged to start the week at 1.6267 but managed to poke to a one-week high of 1.6278 in thin, early trading. The gap toward 1.6315 from last week continues to close.

Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +. EUR -158K vs -162K prior JPY -101K vs -118K prior GBP +27K vs +10K prior AUD +41K vs +49K prior CAD +11K vs +13K prior CHF -14K vs -13K prior NZD +10K vs +10K prior

What stands out is the speculative market buying up the pound sterling after the dip at the start of last week. Traders have had a chance to size up the referendum and they think independence will fail.