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Hardy: Is USD set for rally as China calms nerves?

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This Thursday the People's Bank of China publicly defended its decision to intervene in the market. It follows days of turmoil after the PBoC devalued the Yuan (CNY). But it has now said there's no reason for further devaluation, calming financial markets.

Saxo's John Hardy says the US Dollar has recovered a little and sees a positive correlation between USD and risk appetite. He believes the conditions for the greenback to rally further are strong, particularly if the US sales report out later this Thursday is good. If that's the case, Hardy sees EURUSD moving back lower.

The Aussie Dollar was among commodity currencies hit hard by China's devaluation this week. But John says some believe the move could be positive for assets like gold which could help AUD. He says he doesn't see strong support for the Aussie unless we see gold rally.