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Aussie nears $0.90 as China data weighs

FXStreet (Bali) - AUD/USD is trading heavy in the early stages of the Asian session, en-route to accumulate a 6th day of sharp losses following very disappointing Chinese data over the weekend, with the rate barely holding above 0.90.

Last week's AUD longs rout, even after an 'eye popping' positive Australian jobs report, suggested that market sentiment towards the AUD had shifted to negative, thus it is not a surprise that the market keeps on selling hard the currency on bad news.

Sean Lee, Founder at FXWW, notes that Model/hedge funds have been exiting AUD longs as market vols spikes: "The main driver behind the AUD selling last week would seem to be related to the sharp increase in market volatility."

Sean adds: "Model funds and hedge funds had built large AUD long positions across the board in recent weeks and months, while vols were at record lows. As soon as vols started to spike, the position signals would have reversed, and trailing stops would have been set. Once these stops started going off, they started to feed on each other, leading to the AUD rout. When these events are happening, fundamentals like the strong Australian jobs data are simply ignored."

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