Dollar falls to record low

dollar, coins, moneyThe Australian dollar has dropped to a new six year low as weak Chinese data worries traders and European bond buying boosts the greenback.

At 0700 AEDT on Thursday, the local currency was trading at 75.73 US cents, down from 76.05 cents on Wednesday.

It fell to 75.61 US cents during offshore trade, the its lowest level since May 2009.

Its low spot came several hours after much weaker than expected Chinese industrial production and retail sales data, for February, stirred fears of a slowdown in Australia’s biggest trading partner.

“A slowdown in China, less imports … it’s the worse case scenario really,” OM Financial, senior client adviser of foreign exchange, Stuart Ive said from Wellington.

The Australian dollar also took a hit as the European Central Bank’s 1.1 trillion euro ($A1.55 trillion) quantitative easing program pushed German and French bond yields into negative territory, which helped the US dollar.

“Once the US dollar starts strengthening, commodity prices start coming off,” Ive said.

“That’s added to the downward pressure on the Australian dollar.”

Late on Thursday morning, labour force data for February will be released, with economists expecting the jobless rate to ease from a 12 year high of 6.4 per cent in January to 6.3 per cent.

A surprisingly bad result could see the Australian dollar tumble closer to 75 US cents, with financial markets expecting the Reserve Bank to cut interest rates again from their record lows of 2.25 per cent.

AAP

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