Australian Dollar Late-week Wobbles On China Trade Slump

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The Australian Dollar looks set to end the week on a soft footing, with analysts pointing to China as a factor behind the selling pressures.

The Australian Dollar is a third of a per cent lower on the day at 0.6519 and flat against the Pound at GBP/AUD 1.92, with recent losses following a selloff in Chinese stocks and the Yuan.

"Aussie dollar slide looks to again be linked to China wobbles, leaving it barely above the post-US CPI lows. The Shanghai Shenzhen CSI 300 is on track for a seventh consecutive daily decline," says Sean Callow, a currency market strategist at Westpac.

Image courtesy of Sean Callow, Westpac.

The Shanghai 300 closed at its lowest level since February and the CNY fell after the release of figures showing China's March exports contracted sharply, while imports also unexpectedly shrank.

This matters for Australia, given China is the country's biggest export market and a key source of foreign exchange earnings.

Shipments from China slumped 7.5% year-on-year last month, marking the biggest fall since August last year and compared with a 2.3% decline forecast in a Reuters poll of economists. They rose 7.1% in the January-February period.

Imports fell 1.9%, having risen 3.5%, markets had anticipated growth of 1.2%.

This shift in fortunes suggests the world's second-largest economy might not be undergoing the recovery some had assumed was underway at the start of the year.