Australian dollar slips as economy contracts

The Aussie dollar fell on news the economy contracted by a larger than expected 0.5pc in the September quarter.

The Australian dollar fell on news the economy contracted by a larger than expected 0.5 per cent in the September quarter.

At midday (AEDT) the local unit was trading at US74.25 cents, down from US74.51 cents yesterday.

The Australian dollar had earlier been as high as US74.74 cents, but tumbled quickly after the release of the latest economic growth figures.

The September quarter contraction was larger than expected, with the economy forecast to have shrunk by 0.2 per cent in the quarter, according to an AAP survey of 14 economists.

“With the market pricing in the possible adverse outcome, we should expect some reaction to the headline, but the overall risk on this trade remains symmetrical given positioning on the Aussie is light now,” OANDA senior currency trader Stephen Innes said.

He expects trade in the Australian dollar will be more heavily influenced by external factors and broader US dollar moves.

AAP