Australian dollar hit by Chinese data

The Australian dollar is down again for a 2nd day in todays trading session after a round of disappointing numbers out of China add to the case that the current trade wars between the US and `China are taking its toll on the worlds 2nd largest economy.

Chinese imports and exports during slumped during December which was bound to have an affect on the Aussie dollar as China is the biggest importer of Australian goods

"The trade numbers from China for December eliminated any doubt about the Sino-US trade war having a painful effect on the Chinese economy," says Amy Zhuang, chief Asia analyst at Nordea Markets.

As well as a slowdown in the Chinese economy, the risk of a rate cut from the Reserve bank of Australia is also going to weigh on the Australian dollar and all may be revealed when the latest inflation numbers are released from Australia on Wednesday.

Another figure below 2 percent which is the RBA’s target rate would spell bad news for the Australian dollar and really put pressure on the central bank to ease monetary policy

"A soft inflation reading for Q4 would keep it entrenched below target. If the RBA meeting offers any suggestion that the central bank is less confident the next move in rates is more likely to be up, the AUD would likely crack lower," says Tom Nash, a currency strategist at HSBC in Australia.


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