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 European Union.
The numbers are not in May's favour and her chances of winning vote look slim.