The Australian dollar is sharply lower today after more disappointing news out of China added more weight to the case for an interest rate cut from the RBA.
At 5.52pm (GMT) the Aussie dollar was trading at US72.02c down from US72.45c cents in yesterday’s trade.
Industrial profits in China fell 0.1% year on year, chalking up the 4th consecutive number below zero, and raising more fears about the world’s second last economy.
With problems growing in Australia’s biggest trading partner, the Reserve Bank of Australia is under pressure to further reduce interest rates to offset the lack of growth in the Chinese economy.
The price of Iron ore, Australia’s biggest export is also at multi year lows, but it is still not enough to entice the Chinese to step up demand.
The latest consumer price index figures from Australia are due out early tomorrow with a poor reading leading to an almost certain rate cut from the RBA next week which will add immense pressure to the local currency.
Later tomorrow, investors will await the latest interest rate decision from the RBA and while the market has only priced in a 6& chance of a rate increase, any signs of a hike in December is only going to add to the Aussie dollar’s woes.