The Australian dollar is in danger of hitting its lowest point this year as China’s growth target disappoints and weak local data may cause the central bank to temper its policy stance at Tuesday’s meeting.
(Bloomberg) — The Australian dollar is in danger of hitting its lowest point this year as China’s growth target disappoints and weak local data may cause the central bank to temper its policy stance at Tuesday’s meeting.
China’s “relatively modest” 5% growth target is a headwind for exports as it signals large-scale stimulus is unlikely, Australia & New Zealand Banking Group Ltd. wrote in a note to clients. The Aussie will also be weighed by Federal Reserve Chairman Jerome Powell and Reserve Bank of Australia governor Philip Lowe taking different policy stances this week, according to Commonwealth Bank of Australia.
“Powell is likely to be hawkish” during Congressional testimony after a string of recent strong economic data, CBA strategists led by Joseph Capurso wrote in a note. “Lowe may soften his forward guidance on ‘further increases in interest rates’ in tomorrow’s post-meeting statement because of the recent weaker than expected Australian economic data.”
The Australian dollar has tumbled as much as 6.5% from its Feb. 2 high weighed by ratcheting Fed bets, paring back the euphoria of China’s abrupt end to its Covid-zero stance and sluggish Australian growth. Poor sentiment has slid into stocks with the benchmark S&P/ASX 200 Index dropping as much as 5% from its year-to-date high during results season last month as almost half of the companies reported negative earnings shocks as the threat of recession grows.
The Aussie slipped as much as 0.4% in early trading Monday to 67.43 US cents.
–With assistance from Michael G. Wilson.
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