PERTH: The Australian dollar has tumbled below US70c in morning trading trade after commodities dived in reaction to weak manufacturing data out of China and analysts warned of further heavy falls.
Traders are also pessimistic ahead of today’s release of domestic gross domestic product figures.
At 10am (AEST), the local unit was trading at US69.99c, down from US71.08c at the close of local trade yesterday.
Traders were seen shying away growth-oriented currencies like the Australian dollar overnight amid a broad risk-off trade that was kickstarted by official data out of Beijing showing Chinese factory activity at its lowest ebb for three years.
The development helped dragged several major Asian and European markets down around 3 per cent, while snapping a stunning oil rally.
Crude prices traded down over 5 per cent amid a sell-off in the commodities space that led aluminium to a new six-year trough.
BK Asset Management director of FX strategy Boris Schlossberg said the market was nervous about economic growth figures due out today, which are expected to show a deterioration.
The Australian economy looks to have slowed in the second quarter of 2015 as export volumes and prices fell.
The dollar’s lurch lower came in the wake of a dire forecast from Deutsche Bank analysts.
Deutsche’s Australian chief economist Adam Boyton said Chinese worries and the impact on commodities could potentially push the local unit below US60c for the first time in 12 years.
“I wouldn’t discount the currency moving into the US50s,” Mr Boyton said.
“I’m not saying in the next 24 hours or anything like that but, as a big picture adjustment, that wouldn’t seem unreasonable to me.
