Investing.com - The Aussie remained weaker on Wednesday in Asia despite stronger than expected construction work done as volatile trade on the Shanghai exchange spooked investors.
The Shanghai Composite opened up slightly, before dropping nearly 2% in early trade.
In Australia, second quarter construction work done rose 1.6% quarter-on-quarter, better than the 1.5% drop seen.
AUD/USD traded at 0.7117, down 0.21%, while USD/JPY changed hands at 118.86, up 0.01%. EUR/USD was quoted at 1.1537, up 0.16%.
The data was followed by comments from the central bank that Australia needs sustainable growth not start and stall episodes, Governor Glenn Stevens said Wednesday.
He said that this is especially true as the potential growth rate may be lower than previously thought in the post-financial-crisis world, in remarks to the National Reform Summit.
There may be a need to generate more growth but it must be the "sustainable" kind - not "flash in the pan," Stevens said. "The kind of growth we want won't be delivered just by central-bank adjustments to interest rates or short-term fiscal initiatives that bring forward demand from next year only to have to give it back then."
Earlier, the New Zealand dollar gained as the trade gap came in narrower than expected for the month of July as regional attention remains focused on china.
In New Zealand the July trade balance came in at a deficit of NZ$649 million, narrower than the NZ$750 million expected month-on-month.
In Japan, the July service producer price index rose 0.6%, above the 0.4% expected.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.13% to 94.03.
Overnight, the dollar held gains against the other major currencies on Tuesday, after upbeat U.S. economic reports and after China’s central bank cut interest rates in a bid to bolster economic growth after a plunge in the country’s stock market.
The People’s Bank of China cut interest rates by 25 basis points to 4.6%. The bank also cut the reserve requirement ratio for large lenders to 18.0%.
Fears over a global economic downturn, led by a slowdown in China’s economy have intensified in recent days, accelerating a selloff across global markets.
Asian and European stocks rebounded on Tuesday, but shares in China and Japan continued to slump.
Shares in Shanghai fell around 8% overnight, one day after the worst trading session since 2007, dubbed ‘Black Monday’.
Recent steep declines in Chinese equity markets have sparked fears that they will weaken the world’s second largest economy and undermined investor confidence in the government’s ability to revitalize economic growth.
The turmoil in markets began when China unexpectedly devalued the yuan on August 11, sparking fears over the condition of the economy.
In the U.S., the Conference Board said its index of consumer confidence jumped to a seven-month high of 101.5 this month from a reading of 91.0 in July. Analysts expected the index to rise to 93.4 in August.
Data also showed that U.S. new home sales rose by 5.4% to 507,000 units last month, compared to expectations for a gain of 5.8% to 510,000.