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$A down on Chinese growth fears

Reported by AAP
Wednesday, April 11, 2012
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The Australian dollar has dropped on concerns about Chinese growth coupled with renewed fears for the euro zone.

At 0700 AEST on Wednesday, the Australian dollar was trading at 102.50 US cents, down from 103.03 cents on Tuesday.

Bank of New Zealand currency strategist Mike Jones said that despite a generally positive trade reading from China, the analysis of the country's growth appeared more negative.

"With the Chinese trade out yesterday, although the headline surplus was better, import trade had dropped away sharply," he said.

"That spooked markets a little bit, as it might signal lower commodity demand.

"And then, the IMF (International Monetary Fund) said that exporters should brace for lower prices, and that they're downgrading their view on Chinese trade. So, it was those Chinese growth concerns that worried the market."

China recorded a trade surplus of $5.35 billion in March, a stark turnaround from a $31.48 billion deficit in February, according to official data released on Tuesday.

Frantic selling on European markets overnight, amid concerns about Spanish and Italian yields, had renewed concerns about the euro zone, Mr Jones added.

"Spanish bond yields were off to the races, and that certainly caught the market's eye," he said.

"Spain now appears the most likely candidate to be the next Greece.

"So, overall, global sentiment continues to deteriorate, risk appetite has pared back, equity markets fell, and so did the Australian dollar."

Mr Jones said the local currency would be unlikely to move up much ahead of local labour force data due for release on Thursday.

30/09/2014 21:48Sydney, Australia. 30 September,2014
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