The Australian dollar reached a new six year low in overnight trade after the release of weak GDP figures and more fears over the state of the Chinese economy.
At 8.21am (GMT) the Aussie dollar was trading at US 70.32c after reaching a low of US69.82c earlier in the day.
The latest Chinese purchasing managers index (PMI) came in at 49.7 for the month of August, its lowest level in 3 years and below the number 50, which shows a contraction in the economy.
The fall sparked fears of a drop in demand from China for Australian goods, and especially commodities, which have been driving the economy for the last decade.
"Australia is largely considered a satellite economy to China, so any indication of weakness in China and traders look at the Australian dollar as the first currency outside China to feel the strain," John Hardy, head of foreign-exchange strategy at Saxo Bank A/S in Hellerup, Denmark told Bloomberg.
GDP from Australia came in at 0.2% against a consensus of 0.4% and once again bringing the possibility that the RBA will cut rates again from their record low of 2% in order to boost economic growth.
“For some time we have been forecasting a marked easing in GDP growth in response to the collapse in commodity prices and the end of the mining boom”.
“This now appears to be underway," senior Asia economist at Capital Economics Daniel Martin said.
Australian GDP growth is now one of the worst performing figures in developing countries along with New Zealand and Canada while at the other end of the scale the US is in first place with 2nd quarter growth of 3.7%
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