China's falling exports put Aussie, Kiwi dollars on back foot

[TOKYO] The currencies of Australia and New Zealand retreated following gains of at least one per cent on Friday, after disappointing trade data in China deepened concern that demand for commodities will weaken in their biggest export market.

The South Pacific nations' dollars had the steepest declines among major currencies against the greenback on Monday, after reports in China over the weekend showed exports shrank five times more than economists estimated and producer prices fell by the most in almost six years. The Aussie and kiwi had dropped last month as commodities plunged and bets increased that the Federal Reserve will raise interest rates.

"The worsening Chinese trade balance poses a risk to resource currencies," Toshiya Yamauchi, a senior analyst in Tokyo at Ueda Harlow, a margin-trading services provider, wrote in a note to clients. "China's data boost expectations for more easing while raising concerns about Chinese stocks and resource-linked currencies due to slackening demand."

Australia's dollar declined 0.3 per cent to 73.98 US cents as of 9.06 am in Tokyo on Monday. The currency rallied 1.5 per cent last week after hitting a six-year low of 72.35 on July 31. New Zealand's currency fell 0.2 per cent to 66.11 US cents, after advancing 1.1 per cent on Friday.

The Bloomberg Dollar Spot Index was little changed at 1,212.59 after a report on Friday showed the world's largest economy added more than 200,000 jobs for a third month and the unemployment rate remained at a seven-year low.

BLOOMBERG