INSUBCONTINENT EXCLUSIVE:
LONDON: The Australian dollar and kiwi dollar, gauges of global risk appetite, fell on Monday on fears of a slowdown in China's economy
prompted by a contraction in Chinese exports.
Market sentiment swung negative after data showed that China's December exports unexpectedly
fell, pointing to weakness in world's second-largest economy and a gloomy growth picture.
The data took its toll on Australian dollar and
New Zealand dollar, which both fell more than 0.4 per cent.
China is Australia's largest trade partner and negative sentiment about its
economy does not augur well for Aussie dollar.
Fears of a Chinese slowdown also hit offshore yuan .
The currency rallied 1.5 percent against
dollar last week, its biggest weekly rise since January 2017, seemingly incongruent with recent sluggishness in China's economy.
"The
rally is largely due to optimism surrounding trade talks," said Ulrich Leuchtmann, head of FX at Commerzbank.
"But while momentum suggests
rally looks unstoppable, currency has little ground to appreciate further from an economic fundamentals perspective," he added.
Monday's
risk-off mood led traders to buy safe-haven Japanese yen, which rose 0.4 percent versus greenback.
The dollar index was at 95.56, down 0.1
percent.
"With Federal Reserve signalling a pause in tightening cycle we don't expect today's China trade numbers to have a long lasting
negative impact on sentiment," said Chris Turner, head of foreign exchange strategy at ING in London.
After a stellar 2018 in which
greenback gained 4.3 percent as US central bank hiked rates four times, investors now expect Fed to halt its monetary tightening
policy.
Chairman Jerome Powell reiterated last week that Fed has ability to be patient on monetary policy, given that inflation remains
stable.
The euro on Monday was relatively unchanged at $1.1466
The single currency lost 0.3 percent on Friday after data showed that Italy, euro zone's third-largest economy, was at risk of
recession.
Elsewhere, British pound was marginally lower at $1.2826 at start of what is expected to be a highly volatile week.
Prime
Minister Theresa May must win a vote in parliament on Tuesday to get her Brexit deal approved or risk a chaotic exit for Britain from
The numbers are not in May's favour and her chances of winning vote look slim.
