The U.S. dollar was off slightly versus its biggest rivals Wednesday after data showed the pace of Chinese economic growth steadied in the first quarter, helping to soothe fears of a global economic slowdown.
The ICE U.S. Dollar Index DXY, -0.12% a measure of the currency against six major rivals, was off 0.1% at 96.918. The U.S. unit traded at 111.99 Japanese yen USDJPY, -0.01% down marginally from its level late Tuesday in New York trading at ¥112.02. The euro EURUSD, +0.2039% fetched $1.1308, up from $1.1283.
China’s economy grew 6.4% year over year in the first three months of 2019, according to government data, matching the pace of growth in the final quarter of 2018 and coming in slightly above expectations for an expansion of 6.3%.
The data was seen tentatively soothing worries that troubles for the world’s second-largest economy would contribute to a global slowdown. As a result, currencies viewed as bets on improving global economic growth gained ground.
“It was risk-on overnight as headline Chinese data were strong across the board,” said Sue Trinh, head of Asia emerging market FX strategy at RBC, in a note.
She cautioned, however, that upbeat data showing faster retail sales growth and falling unemployment don’t square with other evidence on factory shutdowns, falling auto sales and a sharp slowdown in import growth.
The Australian dollar AUDUSD, +0.2787% was a big gainer in the wake of the China data, jumping to a more-than-two-month high versus its U.S. counterpart to trade as high as 72.08 U.S. cents. It remains up 0.3% at 71.92 cents.
The Aussie, meanwhile, soared versus its antipodean rival, the New Zealand dollar AUDNZD, +0.7164% after a weaker-than-expected first-quarter inflation reading (1.5% versus 1.7% expected) stoked expectations for a rate cut by New Zealand’s central bank. The Australian currency remained up 0.8% versus the currency known as the kiwi at NZ$1.0685 after trading at its highest level of 2019 at NZ$1.0737, according to FactSet.
“The big drop in NZD despite the better-than-expected China data shows, first off, the dominance of domestic factors versus external ones, plus Australia’s greater interdependence with China: China takes 39% of Australia’s exports vs 27% of New Zealand’s (32% of total trade versus 23%),” wrote Marshall Gitler, chief strategist at ACLS Global, in a note.
Consumer prices rose 1.9% in the year through February, compared with an annual gain of 1.8% the previous 12 months, the Office for National Statistics said Wednesday.
