By TraderVox.com
Tradervox.com (Dublin) – Report from China showing a drop in imports and an Australian report showing a drop in domestic home-loan approvals signaled to a worsening economic growth outlook, dampening the demand for the Australian and New Zealand dollars. The Australian dollar dropped from a two week high against the dollar for the first time in three days. Another report from China indicated that the country’s industrial output rose by least in three years indicating a decline in global economy. The New Zealand currency held its gains against the dollar as speculation of QE3 mounted as the fed prepares to meet tomorrow.
Discussing the Chinese Data, Jonathan Cavenagh, a Westpac Banking Corp strategist based in Singapore agreed that the Chinese data were very weak and south pacific currencies may experience further drops. The drop may be limited as the FOMC meets tomorrow. Government bonds in Australia declined, with ten-year yields falling 0.08 percent to 3.12 percent, as Australian home-loan approvals declined by one percent in July after increasing by the same margin in June according to a Bureau of Statics report released yesterday. The market was expecting the report to show stagnation. Further, a report from National Bureau of statics in China showed yesterday that China’s imports declined by 2.6 percent last month from a year earlier where they rose by 2.7 percent. The report showed that production in China increased by only 8.9 percent, giving significance to President Hu Jintao’s comment that China economic growth is facing significant downward pressure. Takuya Kawabata, of Research Institute Ltd, predicted that China’s slowdown will be a major drag on the Aussie.
The Australian dollar declined by 0.3 percent against the dollar to trade at $1.0358 from last week close of $1.0385. It reached a high of $1.0401 on Sept 7, the highest it has been since August 27. The Aussie declined by 0.3 percent against the yen to trade at 81.04. The Kiwi dropped to 81.15 US cents from 81.25 after it had advanced by 2.3 percent last week. The currency dropped by 0.1 percent against the yen to exchange at 63.49.
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