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Australian Dollar Slides As China GDP Slows To Near 3-year Low

The Australian dollar erased its early morning gains versus its major opponents following a report showed that the pace of the Chinese economic growth slowed to its lowest level in nearly 3-years.

A slowdown in Chinese economic growth would hurt Australia as China is the biggest export partner of mining goods and raw materials rich Australia.

China's gross domestic product expanded 8.1 percent year-on-year in the first three months of 2012, slower than the fourth quarter's 8.9 percent increase. Economists were looking for a growth slowdown to 8.4 percent.

Separately, the statistical office reported that the industrial production grew 11.9 percent year-on-year in March, compared with expectations for a 11.5 percent expansion.

Retail sales increased 15.2 percent annually in March while expectations were for a 14.8 percent rise.

In the equity front, Asian stock markets are trading in green following some positive cues from the Wall Street overnight. Thus far, Australia's S&P/ASX was up 0.66 percent, Japan's Nikkei average rose 1.25 percent, Taiwan's TWII climbed 1.26 percent and South Korea's KOSPI jumped 0.6 percent. Stock markets in China and New Zealand are slightly down.

The Australian dollar shed almost 60-pips against its US counterpart following the data, slipping as low as 1.0387 from early Asian session's 10-day high of 1.0455. The next probable support for the pair is seen around the 1.0350 level.

Overnight economic data from the U.S. was mixed, with the trade deficit narrowing to $46.0 billion in February from $52.5 billion in January, initial jobless claims rising to 380,000 in the week ended April 7 from the previous week's revised figure of 367,000 and the producer price index being unchanged in March following a 0.4 percent increase in February.

The Australian dollar reached a low of 84.18 against the yen, down from early Asian session's 1-week high of 84.84. The next likely support for the aussie-yen pair is seen around the 84.50/55 area.

The members of the Bank of Japan's monetary policy board felt that the expansions in their asset purchase program had a positive effect on the financial markets, minutes from the bank's meeting on March 12 and 13 revealed today.

The minutes also noted that some members believe CPI to be heading for a mild upward trend and away from deflation.

At the meeting, the BoJ decided to expand its loan scheme aimed at supporting economic growth by JPY 2 trillion. At the same time, the central bank kept its monetary policy unchanged. The measure was largely aimed at tackling deflation and establishing a new basis for economic growth.

The aussie that tested yesterday's fresh 3-week high against the euro at the beginning of Friday's Asian session pulled back to 1.2687 after China data. The near-term support for the cross is seen around the 1.2710 level.

The Australian currency extended its steep sell-offs against its Tasman counterpart, slipping as low as 1.2525 for the first time since September 2011. This was down almost 1.2 percent from yesterday's 9-day high of 1.2673. The next likely downside target for the aussie-kiwi pair is seen around the 1.2470 level.

Looking ahead, German, Italian and the U.S. consumer price indexes for March and the University of Michigan's consumer confidence survey results for April are expected to garner market attention in the upcoming sessions.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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