Well, now, who is aware that the China stocks, reflected on Shanghai and Shenzhen boards, have dropped 9% over a single day yesterday? There, I see quite a few hands raised. The shocking thing is that this influenced most regional markets and all but two of those suffered losses too.
For those who are not too aware of what sort of magnitude 9% is, imagine that if you have 100million in your hands today, and the next day you lost 9million of it, would you be shocked? Well, I would be. And how can it happen in a day!
The fact that the rest of the stock markets in the region closed lower as well indicates the increasing dominance of China as compared to the previous scenario of US being the "big brother."
On top of this news, quite a number of reports have pointed to major Central Banks further diversifying their reserves away from USD. And with another conflict brewing in the Middle East, crude oil prices went up and possibly will depress the USD further.
One relationship to note, since Australia is a major producer of gold in the world, set to possibly overtaking the current champion, South Africa, soon, gold prices invariably affect the AUD. And so up goes the value of AUD boosted by the recent spat of increased political and climatic uncertainties.
So, remember, next time, that when the wars are looming, and disasters are strife, buy AUD before anything else.
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