AUD Falls After Chinese Industrial Results

The Australian dollar has slipped below 70 US cents after Chinese industrial profits figures added to evidence that the Chinese economy is slowing.

At 0700 AEST on Tuesday, the local unit was trading at 69.89 US cents, down from 70.33 cents on Monday.

Profits from China’s industrial sector fell 8.8 per cent in August, weighed down by August’s currency devaluation, weak demand and plunging share prices.

BK Asset Management managing director Kathy Lien said the data was the reason why commodity currencies like the Australian dollar fell.

“Both the Australian and Canadian dollars fell sharply today as profits fell by the largest amount in four years,” she said.

“Earnings in the resource sector have been hit particularly hard and this put additional pressure on commodity prices.”

Ms Lien expects the Chinese economy to continue to weigh on the Australian dollar.

“There are major economic headwinds in China and this will limit growth in countries that rely on Chinese demand,” she said.

Local economic data out on Tuesday include the release of the ANZ-Roy Morgan weekly consumer confidence survey.

Via Sydney Morning Herald

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza