Australian dollar under pressure after weak China data

The Australian dollar came under renewed pressure in Asia today on news of weak economic growth in China and a slump in consumer sentiment in April. .

The Australian dollar came under renewed pressure in Asia today on news of weak economic growth in China and a slump in consumer sentiment in April.

The Australian dollar was trading at around US75.85c at 5.45pm (AEST) having earlier traded at close to US76.30c. It was trading at US75.80c late yesterday.

China, Australia’s biggest trading partner, which buys vast amounts of iron ore from mines in Western Australia’s Pilbara region, posted growth of 7 per cent year-over-year in the first quarter, its slowest pace in six years.

The data raised alarm bells among some analysts who warned that Beijing might struggle to realise its full-year growth target of about 7 per cent.

China’s monthly data print also showed industrial-production growth moderating to 5.6 per cent year-over-year in March.

Sean Callow, currency strategist at Westpac, said the industrial-production numbers were the weakest since the global financial crisis low of 5.4 per cent and can’t be blamed on the Lunar New Year.

China’s growth data followed a soft trade report from the world’s second-largest economy earlier in the week, and news of a world-growth downgrade by the World Bank.

Australia’s economy is also reeling as the price of iron ore has collapsed and demand from China has weakened.

Data out today also showed Australian consumer confidence had weakened further in April in the wake of higher unemployment and a dwindling national income at the end of a decade-long mining boom.

The Westpac-Melbourne Institute consumer sentiment index, a closely-watched gauge of household confidence, fell 3.2 per cent to 96.2 points in April from 99.5 points in March. An index reading below 100 indicates pessimists outnumber optimists.

“This is a disappointing result,” said Bill Evans, chief economist at Westpac in Sydney.

Mr Evans said volatile energy and commodity prices fuelled uncertainty about the future of the resource-dependent economy, causing households to feel insecure.

The employment data out tomorrow would be critical, with financial markets pricing in another two interest-rate cuts this year.

Economists say they expect 15,000 new jobs to be created and the unemployment rate to remain at 6.3 per cent.