AUD/USD Around 0.9150 as China Inflation Dims Export Outlook

Australia’s dollar fell against most of its major peers amid concern faster inflation in China will damp prospects for exports to the South Pacific nation’s biggest trading partner.

The Aussie was near its weakest in almost three years against the greenback as a gauge of business conditions dropped to the lowest since 2009, adding pressure on the Reserve Bank to reduce borrowing costs. Traders increased bets to a record last week that Australia’s currency will weaken further. Demand for New Zealand’s kiwi dollar was supported after business confidence (NABSCONF) rose to the highest in almost four years.

“The higher China inflation suggests less likelihood the People’s Bank of China will provide monetary policy support,” said Joseph Capurso, a Sydney-based currency strategist at Commonwealth Bank of Australia. (CBA) “The new Chinese government is less focused on engineering rapid economic growth and more focused on sustainability, so the market has marked down demand for Australian exports to China, and pushed down the Aussie.”


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.