SINGAPORE- The dollar found support on Thursday as simmering Sino-US tensions and weak Chinese consumption data knocked investors’ faith in a fairly swift global economic recovery from the coronavirus crisis.
China’s 3.2 percent economic growth last quarter easily beat market expectations for 2.5 percent. But an unexpected drop in retail sales – for a fifth straight month – was an unwelcome harbinger of possible problems ahead for the rest of the world as more countries relax lockdowns and allow businesses to reopen.
The growth-sensitive Australian dollar slipped under 70 cents after the data, and the greenback clambered off an overnight one-month low against a basket of currencies.
“While in general it’s fair to say that the numbers beat expectations, what the numbers also reveal is that we’re seeing that the China consumer remains behind,” said National Australia Bank FX analyst Rodrigo Catril in Sydney.
“That cautiousness is something the market is looking at in terms of countries where the consumer plays a bigger role, so that’s obviously relevant for the US as well.”
The Aussie was last down 0.3 percent at $0.6988, the kiwi 0.2 percent softer at $0.6557 and the Chinese yuan fell off a four-month high in offshore trade to 6.9962 per dollar.