Weaker than expected Chinese economic data released over the weekend weighed on the Australian dollar in Asian trade yesterday.
Statistics released by Beijing painted a picture of rising inflation and slowing domestic growth, prompting worries that China's demand for Australian exports would weaken. At 5pm AEDT, the dollar was buying $US1.0218, down US0.25c.
Ray Attrill, a foreign exchange strategist at National Australia Bank, said that given the weak Chinese data, the dollar was likely to fall further, even if the Reserve Bank gave up its rate-cutting bias.
"We believe the Australian dollar can leak lower again without the need for domestic data to turn for the worse, in particular if the US dollar continues to trade with a steadier tone," he said.
"Metals prices are one fundamental driver we believe could be a catalyst for fresh weakness, all the more so after a set of relatively soft China February data."
Traders are betting there is only a 24 per cent chance that the RBA will ease interest rates by 25 basis points at its meeting next month.
"We anticipate $US1.0100 will continue to offer good support, but the Australian dollar risks temporarily breaking to the downside, because of the decline in base metal commodity prices over the last month, the firmer US dollar and dampening impact the yen is generating on non-Japan Asian currencies," said Chris Tennent-Brown, a strategist at CBA.
