Forex - Aussie drops further as China data, consumer survey downbeat

Investing.com - The Australian dollar dropped further on Wednesday after a spate of data from China and a consumer sentiment survey at home pointed to subdued economic prospects.

AUD/USD traded at 0.7611, down 0.21%, while USD/JPY changed hands at 119.59, up 0.16%. EUR/USD was quoted at 1.0636, down 0.19%. NZD/USD rose to 0.7538, up 0.23%, on remarks about Auckland's surging housing market.

China's first quarter GDP rose 7.0% year-on-year, matching expectations, while industrial output gained 5.6%, below the 6.9% seen and retail sales increased 10.2%, lower than 10.9% expected and fixed assets investment gained 13.5%, less than the 13.8% seen.

Earlier, the April Westpac-MI consumer sentiment survey for Australia dipped 3.2% to 96.2, following a 1.2% fall in March, prompting related commentary that the Reserve Bank of Australia would cut its cash rate by 25 basis points in April to a record low 2.0%.

Separately, the Reserve Bank of New Zealand warned on Wednesday that housing-market imbalances have increased since late-2014 and are worrying because low inflation excludes monetary policy to counter demand.

"Since late-2014 housing-market imbalances have become more accentuated-particularly in Auckland where the supply shortage is greatest," RBNZ Deputy Governor Grant Spencer said Wednesday. "This is of concern to the Reserve Bank as it poses a threat to financial and economic stability."

"This cycle is unusual in that CPI inflation is staying very low -
requiring interest rates to also stay low - even though rising asset prices are raising financial-stability concerns," Spencer said. The most powerful tool against housing-market risk is the cash rate.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was quoted at 99.12, up 0.11%.

Overnight, the dollar pushed lower against a basket of other major currencies on Tuesday, as the release of disappointing U.S. data sparked fresh concerns over the strength of the economy, fuelling uncertainty over the timing of a rate hike.

The U.S. Commerce Department said that retail sales rose 0.9% last month, disappointing expectations for a gain of 1.0%. Retail sales fell by 0.5% in February, whose figure was revised from a previously reported fall of 0.6%.

In a separate report, the Commerce Department said that producer prices increased 0.2% last month, in line with forecasts and after falling 0.5% in February.

Year-over-year, the producer price index declined 0.8% in March, meeting expectations and following a drop of 0.6% in the preceding month.

The euro was boosted after the International Monetary Fund raised its growth forecast for the euro zone in 2015 to 1.5%, up from 1.2% previously. The fund believes that the weaker euro and the fall in oil prices will bolster growth.

The IMF left its forecast for global growth this year unchanged at 3.5%, but warned that the recovery is “moderate and uneven”.

Tension between Greece and its euro zone creditors continued to remain high on Tuesday. Hours after the Financial Times reported that Greece is formulating a plan on how to respond from a possible default on its debt, officials from Athens denied the report and shot down speculation of a new election that would effectively unseat the Syriza government.

The comments came ahead of next Monday's deadline from the euro zone working group for a list of revised Greek reform measures it deems necessary to unlock critical aid. Yields on the 2-Year Greek bonds spiked more than 20% amid the uncertainty.