The U.S. dollar continued to strengthen in Asia on Wednesday morning while the Aussie dollar slipped on disappointing economic growth data.
The U.S. Dollar Index that tracks the greenback against a basket of six major currencies rose 0.07% to 96.863 by 10:15 PM ET (3:15 AM GMT). The dollar gained against other currencies Tuesday after data showed a rebound in U.S. housing and services activity, which eased concerns over a slowdown in the world’s biggest economy.
The Australian dollar kept losing ground to the dollar. The AUD/USD pair was down 0.63% to 0.7037.
The Reserve Bank of Australia’s (RBA) March policy meeting was held on Tuesday with the country’s economic growth data for the last quarter coming in at a disappointing 0.2%, below the expected 0.3%, providing more evidence of slowing domestic growth and sparked more conversations over a rate cut this year. The RBA meeting ended with rates at a record-low 1.50%.
“Given that many forecasters were on 0.2% for fourth-quarter GDP, the price action on the Australian dollar is worrying,” said Sean Callow, senior currency strategist at Westpac in Sydney, according to Reuters. “It seems markets are not impressed with the details of the report, such as 0.4% on household consumption, slight downward revisions and reliance on public spending to keep the economy moving.”
The Australian dollar also took a hit last month after the RBA stepped back from a long-standing tightening bias.
The USD/CNY pair inched up a modest 0.13% to 6.7153. The yuan was supported by optimism of a possible Sino-U.S. trade deal and was little affected by the country’s annual policy summit commenced Tuesday.
Chinese Premier Li Keqiang said at opening of the National People’s Congress (NPC) that the country has set the GDP growth target for 2019 between 6% and 6.5%, which is the lowest rate in 30 years, and cutting taxes and fee by nearly 2 trillion yuan ($300 billion) to support various industries.
The People’s Bank of China (PBOC) set the yuan reference rate at 6.7053 versus yesterday’s fix of 6.6998.
The market is also closely watching Friday’s U.S. non-farm payrolls release for February which will indicate wage growth and labour market strength.