As expected the Aussie dollar fell yesterday, along with markets elsewhere. But the currency’s fall slowed overnight and the dollar was operating in a range between 90.20-30 this morning in early Asian trading.
A combination of fears about the Chinese economy’s health after the release of data for August at the weekend, and worries about the US Federal Reserve pushed everything lower in Australia yesterday.
Offshore the dollar dipped to a low of 89.84 US cents and then recovered the 90 cents level and stayed there.
US markets ended on a mixed note.
The Dow rose 43.63 points, or 0.26%, to finish on 17,031.14, but the S&P 500 lost 1.41 points, or 0.07% to end on, to 1,984.13, and the Nasdaq Composite dropped 48.70 points, or 1.07 %, to finish on 4,518.90.
Gold and oil rose as the US dollar eased as markets focused on the Fed meeting tonight and tomorrow and the Scottish independence vote on Thursday night, our time.
The dollar and local market was hit by data which showed China’s factory output grew at the weakest pace in nearly six years in August, while growth in other key sectors also slowed.
Output of electricity, cement, steel, appliances, vehicle production and sales, and importantly, electricity production, all either fell or saw a slowing in the rate of growth.
The dollar fell as low as 89.90 US cents and is closed around 89.96 US cents.
The fall yesterday means the Aussie currency has lost 4% in value in the past week, from around 94 US cents at the start of last week, and is at a six-month low.
That will please exporters, such as miners and farmers.
RBA Governor, Glenn Stevens has been pointing to the currency being “above most estimates of its fundamental value” for much of the past year.
“It is offering less assistance than would normally be expected in achieving balanced growth in the economy,” he said in the post-RBA board meeting statement earlier this month and his comments will be in the minutes of that meting which are to be released later this morning.
The local stockmarket lost more than 57 points amid widespread profit-taking yesterday.
The ASX 200 Index and the All Ords each lost 1%, to 5473.5 points and 5475.4 points respectively.
The fall came after the market has seen three consecutive weekly losses.
The big four banks dragged the market lower, with the Commonwealth Bank down 1.6% to $78.92, Westpac and the ANZ each dropped 1.4% cent to $33.77 and $32.37 respectively. The National Australia Bank fell 1.3% to $33.80.
Macquarie Group however went against the trend, rising 1% to $58.55 afte lifting its earnings guidance for the current financial year.
Despite a further fall in the world iron ore price, Fortescue Metals rose half a per cent to $3.96.
BHP Billiton and Rio Tinto though each lost 0.4% to $35.64 and $61.66 respectively.
