SYDNEY—Weaker-than-expected Chinese economic data released over the weekend weighed on the Australian dollar in Asia trade Monday.
Statistics released by Beijing painted a picture of rising inflation and slowing domestic growth, prompting worries that China's demand for Australian exports would weaken. At 0547 GMT, the Aussie dollar fetched US$1.0224 compared with US$1.02248 late Friday.
Given the weak Chinese data, the Aussie dollar is likely to fall further even if the Reserve Bank of Australia gives up its rate cutting bias, said Ray Attrill, a foreign exchange strategist at National Australia Bank NAB.AU +1.74% .
"We believe the Australian dollar can leak lower again without the need for domestic data to turn for the worse and RBA rate cut hopes to revive, in particular if the U.S. dollar continues to trade with a steadier tone," said Mr. Attrill.
"Metals prices are one fundamental driver we believe could be a catalyst for fresh weakness, all the more so after a set of relatively soft China February data," he said.
Traders are betting a 24% chance that the RBA will ease interest rates by 25 basis points when policy makers gather in April and are pricing for 22 basis points of cuts over the year ahead.
"We anticipate US$1.0100 will continue to offer good support, but the Australian dollar risks temporarily breaking to the downside, because of the decline in base metal commodity prices over the last month, the firmer U.S. dollar and dampening impact the yen are generating on non-Japan Asian currencies," said Chris Tennent-Brown, a strategist at CBA CBA.AU +0.43% .
For the week ahead, local employment figures will be the highlight and traders are also watching out for business and consumer confidence and home loans data.
"We expect the unemployment rate to have held steady in February at 5.4%, with the employment-to-population ratio treading water too, which implies a net employment gain of 25,000 positions," said Stephen Walters, the chief economist at J.P. Morgan JPM -0.85% in Sydney.
"While we are calling for relative stability in the key labor market rates in February, we do not see signs of a genuine labor market and income recovery yet," he said.
