The Australian dollar hit a fresh six-month low

The Australian dollar hit a fresh six-month low on Monday morning sparked by Chinese industrial production slowing to its lowest level since the global financial crisis.
The data release from China on Saturday was well below economist expectations of an 8.8 per cent year-on-year rise in industrial production, instead coming in at 6.9 per cent year-on-year.
Early on Monday, the Australian dollar was at risk of breaching the US90¢ mark, hovering at US90.10¢. Shortly after 10am it fell as low as US90.00¢.
“Short of outright policy easing, China will likely miss the 7.5 per cent growth target this year, and a sharp economic slowdown will also endanger the undergoing structural reforms,” ANZ chief China economist Li-Gang Liu said.
“As such, we reckon that Chinese authorities should further relax monetary policy as soon as possible to prevent the growth momentum from decelerating further.”
Should China’s economy faulter, the Australian dollar and economy will be in the firing line. Australia’s most valuable commodity, iron ore, has plunged close to 40 per cent this year as supply has began to outweigh Chinese demand. However, the local currency has not matched the falls seen in the steel making ingredient.
The Australian dollar has fallen 3.4 per cent in September, although it was surprising that the currency fell last week in face the of strong jobs data and the Reserve Bank of Australia’s neutral policy stance, BK Asset Management managing director Kathy Lien said.
“However the market’s demand for US dollars is strong and the fear about a further decline in iron ore prices weighed heavily on the currency,” Ms Lien said.
“Whether Aussie continues to fall next week hinges on the RBA minutes and the FOMC rate decision.  If the tone of the last RBA meeting is decidedly neutral and the Fed grows less dovish, [the Australian dollar] will fall easily through 90 cents but if the Fed is elusive, we could see a much-needed relief rally in the currency.”