During local trade the ‘Aussie’ slipped against the US Dollar after worse-than-expected Chinese data inspired concerns for the world’s second largest economy and made investors lose their appetite for risk.
The Australian Dollar exchange rate was trading in the region of 1.0422 against the US Dollar as of 10:06 am GMT
Although economists had forecast that China’s economy would grow by 8 per cent in the first three months of 2013, the nation recorded growth of 7.7 per cent for the first quarter.
China’s industrial production also increased by 8.9 per cent, significantly lower than the expected 10.1 per cent gain.
Although China’s retail sales increased by 12.6 per cent year-on-year, the one positive result was not enough to offset the negative ones. After the GDP figures were published investors flocked to safe-haven assets, boosting the US Dollar and Yen.
Before the Chinese data was released the Australian Dollar was trading in the region of a 3-month high against its US counterpart.
The ‘Aussie’ had been supported by the news that Australian home loans increased by 2 per cent in February. This was up from a 0.3 per cent decline in January and was 0.5 per cent more than economists had predicted.
After the stream of Chinese data was published the ‘Aussie’ fell against the majority of its peers.
As currency strategist Jim Vrondas noted: ‘It just raises the question of whether the recovery or pick-up in economic activity that we saw in the Chinese economy is sustainable.’
The Australian Dollar is likely to experience extreme volatility tomorrow following the publication of minutes from the Reserve Bank of Australia’s latest policy meeting.
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