The Australian Dollar was broadly lower following weak Chinese retail
sales data.
A soft run for the Aussie extended through Tuesday after investors reacted
to news of weak consumption data from China, which served up another
reminder of China’s macro imbalances.
It also reminds us that the Australian Dollar remains weighed down by
developments in its largest trading partner, with the currency now down
against all G10 peers over the course of the past month.
The NBS (LON:NBS) said Chinese industrial production remained steady at
+5.4% y/y, matching expectations, but there was another underwhelming
retail sales report, where a fall to 3.0% y/y in November from 4.8% in
October was reported.
The consensus had anticipated a rise to 5.0%.
«Momentum from last month’s stronger Golden week driven activity was
unlikely to last given weak consumer confidence. A sustained improvement
in consumption hinges on the outlook for property,» says Sam Hill, Head of
Market Insights at Lloyds (LON:LLOY) Bank.
China reported that home price declines slowed in November, with new
homes reported at -6.1% y/y from -6.2% previously, while used home price
deflation eased to -8.5% from -8.9%.
However, Hill points out that activity has only picked up in tier-one cities,
where overcapacity is less of an issue.
«There remains a huge overhang of unsold homes (estimated at 60-80mn,
around 8-10 years of sales) across the country and while property
investment is falling, building is still in excess of what the economy needs.
Price declines will always run into pockets of interest on the way down, but
until supply and demand find some form of equilibrium the market won’t
find an enduring base,» says Hill.
Australian Dollar Hit by Fresh Chinese Disappointment
