The Australian dollar has pulled back sharply today after mixed numbers out of China cast a shadow over the Chinese economy.
At 5.27pm (GMT) the Aussie dollar was trading at US72.85c after reaching a high of US72.82c in yesterday’s trade.
After a 9 day winning streak, its best consecutive run in 6 years, the Australian dollar succumbed to selling pressure after data out of the world’s 2nd biggest economy failed to live up to expectations.
Although imports fell a less than expected 1.1% last month, imports dropped by17.7%, leaving a trade surplus of 376.2 billion wan, with the drop in imports attributed to the lack of demand in Iron ore, Australia’s biggest export which sent the local currency tumbling.
Adding fuel to the fire was St. Louis Fed President James Bullard who noted in a speech today that the US Federal Reserve should move ahead with raising rates this year.
He mentioned that with unemployment running at 5.1%, and an inflation figure just below the Fed’s target, it is the wrong decision for the central bank to hold off any longer lifting rates and inflation will move higher as a result of the move.
The Aussie dollar may face more pressure early tomorrow with the release of the latest CPI Figures from China where we may see the Aussie dollar drift lower towards the US71.95c resistance level if the figure comes in under expectations.
This will mean more trouble for the Chinese economy with a double dose of bad news in consecutive days.