Aussie dollar softer in late trade

The local unit remains on the back foot, despite upbeat Chinese data.

The Australian dollar could fall further if inflation figures are weaker than forecast.

The Australian dollar continues to slide, following weakness shown in the latest employment data.

At 5pm (AEDT) on Friday, the local unit was trading at US76.38 cents, down from US76.68c on Thursday.

The Australian dollar was at US77.3c before the release of September’s job report on Thursday, and a big decline in full-time employment has driven its fall since, Moody’s Analytics economist Emily Dabbs said.

Some “upbeat” Chinese house price data released after the Australian jobs data was not enough to help the Aussie recover any lost ground, she said.

There are risks the Australian dollar could fall further if inflation figures to be released on Wednesday are weaker than forecast, Ms Dabbs said.

Greg Gibbs, who heads the Colorado-based Amplifying Global FX Capital, said uncertainty around soaring debt in both Australia and China’s property markets “continue to lurk in the background” for currency traders.

In Australia, the Reserve Bank of Australia has warned that fears about growing oversupply of apartments on the east coast were now “coming to the fore.”

Mr Gibbs said the potential for a property shakeout, especially in the booming apartment sector, will worry the central bank, especially if it strikes while the economy was still trying to deal with a big drop in mining investment.

A plunge in apartment prices would also hit property developers hard, Mr Gibbs said, leading to falling business confidence and job losses.

“Property developers...may prove to be a significant drag on activity and confidence and force the RBA to ease policy more than expected in coming months.”

A big risk factor is a fast-approaching apartment oversupply in Melbourne and Brisbane, followed by Sydney, Mr Gibbs said.

In China, the RBA has also pointed to the problem of rising property-sector debt at a time of slow growth, which could further weigh on the country’s economy.

Mr Gibbs said Chinese authorities have started to tighten monetary conditions and rules on property investment, citing Chinese media.

It may take several months for these efforts to have an impact, but China’s economic growth may weaken next year, he said.

Dow Jones, AAP