The Australian dollar today declined against its US counterpart as markets digested the impact of weak Chinese industrial profits data on commodity-linked currencies such as the Aussie. The Aussie’s decline was further compounded by the re-emergence of Sino-US trade war fears based on recent news regarding potential orders by the US government against Chinese companies.
The AUD/USD currency pair today dropped from an opening high of 0.7077 to a low of 0.7032 in the early European session.
The Aussie’s decline was triggered by the release of the Chinese industrial profits data during the Asian session, which recorded a 1.8% year-on-year contraction in November, as compared to the previous figure of 3.6% growth. The weak Chinese data triggered a massive selloff in commodity-linked currencies such as the Aussie and the New Zealand dollar, which are major commodities exporters to China. Interestingly, the Chinese yuan did not post any declines following the news, but actually rallied higher. A news report that President Donald Trump was thinking of barring American companies from using Huawei and ZTE products also affected the Aussie.
The Aussie failed to benefit from the overnight rally in Asian and global equity markets as well as the higher crude oil prices. The greenback’s weakness in the early European session as tracked by the US Dollar Index also had a muted impact on the currency pair.
The currency pair’s short-term performance is likely to be driven by market sentiment due to thin holiday trading.
The AUD/USD currency pair was trading at 0.7050 as at 11:49 GMT having recovered from a low of 0.7032. The AUD/CHF pair was trading at 0.6989 having dropped from a high of 0.7035.
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Australian Dollar Drops on Weak Chinese Data and Trade War Fears
