Aussie dollar hit by US, China woes

THE Australian dollar has been hammered as risk sentiment took a knock following steep losses in US stock futures and weakness in the Chinese yuan.

The Aussie broke critical chart support of 70.41 US cents in late afternoon trading to be last down 0.7 per cent at a near 33- month low at 70.22. The losses intensified as the yuan slipped to a 22- month low of 6.9745.

E- Mini futures for the S& P 500 skidded 1.1 per cent, as did FTSE futures, deepening Thursday’s market rout.

For the week so far, the Aussie is now down 1.3 per cent. If the currency slips below 70 it will be the first time since February 2016. After a week devoid of Australian data, the diary turns packed next week with home building approv- als, retail sales, trade and the key consumer price numbers for the third quarter.

Analysts expect a subdued inflation outcome, in part due to new government subsidies for childcare which sharply reduced costs. Annual underlying inflation is seen stuck around 1.8 per cent to 1.9 per cent, which would be the 11th straight quarter below the floor of the Reserve Bank of Australia’s 2- 3 per cent target range.

“The general picture will remain one of inflation tracking along the bottom end of the RBA’s target band,” said CBA chief economist Michael Workman. “That sort of outcome, against a background of solid economic activity data, will probably leave the RBA happy to say the next rate move is ‘ up’. But also leave them signalling any move as some way off.”