Dollar, Aussie fall after Chinese trade data disappoints

The New Zealand and Australian dollars touched their lowest levels in almost two weeks after weaker-than-expected trade data from China, the largest trading partner for both countries.

The kiwi touched 74.20 US cents and was trading at 74.40 cents at 8am in Wellington, from 74.49 cents at 5pm yesterday. The Aussie touched 75.50 US cents and was recently trading at 75.91 cents from 75.85 cents yesterday.

Chinese data yesterday showed export sales contracted 15 percent in March from the year earlier, while imports shrank 12.7 percent, the third straight month of declines, raising concerns about weak domestic demand. The kiwi and Aussie dropped sharply on the news yesterday on concern for exports of commodities such as milk powder and iron ore, and held at low levels overnight.

" The unexpected slump in China exports may have been a result of seasonal disruptions rather than soft demand, but the import numbers were still pretty weak," Kymberly Martin, senior market strategist at Bank of New Zealand, said in a note. "The moves show how sensitive the market remains to any signs of softness in the China economy."

Following the data, the World Bank lowered its 2015 China growth forecast to 7.1 percent from a previous estimate of 7.2 percent, and its 2016 estimate to 7 percent from 7.1 percent. Asia's largest economy will release its first quarter gross domestic product data on Wednesday. Economists forecast growth slowed to 7 percent in the first three months of the year, the weakest pace in six years, CNBC reported.

In New Zealand today, the focus will be on the release of the New Zealand Institute of Economic Research quarterly survey of business confidence. The survey is published at 10am. The Real Estate Institute is also expected to release its monthly house sales data for March today.

Meanwhile, Prime Minister John Key is scheduled to give his pre-budget address at a BusinessNZ lunchtime function at Te Papa in Wellington.

Tonight, all eyes will be on US retail sales data for March for a gauge on how the world's largest economy is tracking.

The New Zealand dollar was little changed at 98.12 Australian cents from 98.14 cents yesterday ahead of the publication of Australian business confidence today.

The kiwi dropped to 89.44 yen from 89.75 yen yesterday as the yen strengthened after comments from Koichi Hamada, an advisor to Prime Minister Shinzo Abe, that the yen is weak at its current levels.

The local currency weakened to 50.76 British pence from 51 pence yesterday and advanced to 70.43 euro cents from 70.33 cents. The trade-weighted index was at 78.66 from 78.60 yesterday.

(BusinessDesk)