Dollar falls on China economy worries

Fan of dollars, moneyThe Australian dollar has slipped below 70 US cents after Chinese industrial profits figures added to evidence that the Chinese economy is slowing.

At 0700 AEST on Tuesday, the local unit was trading at 69.89 US cents, down from 70.33 cents on Monday.

Profits from China’s industrial sector fell 8.8 per cent in August, weighed down by August’s currency devaluation, weak demand and plunging share prices.

Kathy Lien, MD, BK Asset Management, said the data was the reason why commodity currencies like the Australian dollar fell.

“Both the Australian and Canadian dollars fell sharply today as profits fell by the largest amount in four years,” she said.

“Earnings in the resource sector have been hit particularly hard and this put additional pressure on commodity prices.”

Lien expects the Chinese economy to continue to weigh on the Australian dollar.

“There are major economic headwinds in China and this will limit growth in countries that rely on Chinese demand,” she said.

Local economic data out on Tuesday include the release of the ANZ-Roy Morgan weekly consumer confidence survey.

AAP

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