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With the recent shift in the Fed’s rhetoric, the spotlight has been on the Greenback for the past few days. In today’s edition of Piponomics though, I will be making an argument for why you should be keeping close tabs on the Australian dollar as well.

AUD/USD has been stuck in a ridiculous sell-off the past couple of months. It’s down by about 1,500 pips since April! For the most part, the move was sparked by the RBA’s rate cut and George Soros’ short AUD bet.

However, we should expect volatility to persist on the Aussie this week. Here are three reasons why:

There are a few reports due from China.

This week, we’ve got Chinese inflation and trade balance figures on our calendar. China is Australia’s largest trade partner so this makes the Aussie vulnerable to the Asian Superpower’s economic releases.

Inflation data already came out and printed mixed results. The CPI report for June printed at 2.7%, while the PPI report showed a 2.7% decline. Meanwhile, trade balance figures will be made available tomorrow at 12:00 am GMT and expectations are for a surplus of 27.8 billion CNY.

Positive trade figures could mean that the Chinese economy is faring well, which may translate to higher demand for Australia’s exports. In turn, a better-than-expected report could be bullish for the Aussie while a negative figure could get it sold off.

We’ll get a better gauge of the Australian economy.

A couple of leading indicators for the Australian economy are scheduled for this week, too.

The first one was released earlier today. The NAB consumer confidence index came in at 0, indicating that confidence has remained steady since May. Meanwhile, the Westpac consumer sentiment report will be on tap tomorrow. If you remember, last month’s figure showed a 4.7% uptick. A higher reading for July could give the Aussie some support as it would indicate better consumer optimism.

However, I think most people will be paying attention to Australia’s employment data that’s headed our way later this week. Expectations are for a modest increase of just 300 jobs in June, following the 1,100 increase we saw last month.

Watch out though! Recent PMI reports indicate that there’s a chance for a positive surprise. A figure substantially above the 300 forecast could trigger a strong AUD-buying spree.

The FOMC Meeting minutes could fail to impress.

Due to be released tomorrow, at 6:00 pm GMT, the minutes of the FOMC meeting from June is highly expected to drop more hints about the Fed‘s plans of tapering asset purchases. However, some market junkies, including myself, are thinking that the minutes may fail to impress.

After all, almost everyone already expects the Fed to take a step back from QE. Is there anything new that the minutes would reveal? If this turns out to be the case tomorrow, we could see the Aussie, along with the other higher-yielding currencies, pare some of their losses to the dollar.

With AUD/USD already trading at multi-year lows, some traders are speculating that the pair is already oversold and warn that we could see a reversal soon! What do you think? Is it high time we see the Aussie comeback or is there more room for it to move lower?