Tuesday saw the Reserve Bank of Australia (RBA) leave the official cash rate on hold at a record low of 2% which was widely tipped by most economists. The AUD continued to fall through the day reaching a low of 0.7420 after sitting above 0.75c only briefly.

The statement following the decision seemed a little more upbeat than previous meetings, mentioning that unemployment rates were steadying and borrowing rates were rising, however the AUD only reacted very briefly and then continued on the down trend that we have seen for the past few weeks.

Even though the Australian dollar has declined from around USD0.77 at the June meeting to just below USD0.75 today, the Governor Glenn Stevens repeated his comment, “Further depreciation seems both likely and necessary, particularly given the significant declines in key commodity prices”.

“The RBA’s policy meeting was largely a non-event for the Australian dollar,” Forex.com research analyst Chris Tedder said. “However, the currency remains under pressure due to an ongoing massacre in Chinese equity markets, which is partly responsible for 5.4 per cent fall in the spot price of iron ore overnight.” The price of Iron Ore has dropped to their lowest levels since April, and dropping for 8 consecutive days.

With all of the world’s attention focused on Greece in the past few weeks, it’s barely been noted that China’s stock market has lost over 3 Trillion Dollars in value within the last month, Iron Ore prices continue to decline at a rapid rate, and Australia should be much more worried about what is happening in China rather than what’s going on in Greece.

These two current events however will ensure plenty of volatility in the coming days and the AUD will now look forward to tomorrow’s unemployment result to see if it recovers any gains that have been lost this week.

The AUD/USD Exchange rate is trading at 0.7444 at 08:00am on Wednesday.