Rates At 0600 GMT
AUD/USD 1.0172 -0.09%
AUD/JPY 80.84 -0.36%
6.25% Apr, 2015 2.3052% -0.0141
5.50% Apr, 2023 3.0040% -0.0974
10-Yr Spread To U.S. +139 bps +3 bps
SFE Sept 3-Year Futures 97.71 +0.01
SFE Sept 10-Year Futures 97.10 Unchanged
By James Glynn
SYDNEY--The Australian dollar was down slightly late Tuesday after Chinese trade data for June showed unexpected weakness, deepening worries about economic growth in the Asian giant.
China posted a trade surplus of $31.7 billion courtesy of weaker-than-expected import growth of 6.3% versus a consensus of 11%.
"It adds fuel to the argument of slowing investment and domestic activity within China," said Cameron Peacock, market analyst at IG Markets.
But China is well placed to stimulate its economy if needed, and it may do so, he added.
"The question now is what will be China's policy response? New leadership takes the reins in October and the incumbent leaders will no doubt be determined to hand the country over in good health," Mr. Peacock said.
At 0600 GMT, the local currency was at US$1.0172 from US$1.0182 late Monday. Against the yen, it was at Y80.84 from Y81.13.
Earlier, an Australian business survey showed confidence remains in the doldrums, despite aggressive interest rate cuts by the Reserve Bank of Australia in recent months.
National Australia Bank's business confidence index fell to -3 in June from -2 in May, while its business conditions index rose to -1 from -4 in the same period.
The RBA slashed interest rates by 50 basis points in May and by a further 25 basis points in June, to bolster the economy in face of a worsening global backdrop and evidence parts of the domestic economy have stalled. Its cash rate target now stands at 3.50%.
Craig James, chief economist at Commonwealth Securities, said the survey showed the economy remains very weak outside of mining and the RBA may need to cut interest rates further next month.
"Companies are discounting heavily, financial conditions remain tight, the non-mining economy is largely only chugging along at present and there are still downside risks to the global economy," he said.
Speeches by RBA Deputy Governor Phil Lowe in coming days will be closely watched by the markets to see if the RBA still wants time to see if the interest rate cuts since May will deliver much benefit to the economy.
(Data provided by Reuters)
Write to James Glynn at firstname.lastname@example.org
Copyright (c) 2012 Dow Jones & Company, Inc.
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