Tuesday, March 20, 2012

why Aussie dollar down march 20 2012

why Aussie dollar down march 20 2012 : The Australian dollar and some Asian currencies slid against the dollar in Asia trade after an Australian mining executive said Chinese appetite for iron ore may be slackening. The dollar also improved modestly against the euro and yen, but moves were muted as traders faced a thin data calendar, and no troubling headlines emerged from Europe.

A speech by a BHP Billiton executive around 0130 GMT stirred things up, however, as the official said Chinese demand for iron ore is "flattening out." Separately, a Rio Tinto executive also acknowledged iron ore output is lagging forecast demand, but said he is confident demand will hold up.

The comments sent the Aussie dollar plunging to $1.0552 from $1.0620 before the comments. China's appetite for natural resource exports from Australia is a huge contributor to the Australian economy and has been a big factor in the Aussie dollar's recent rise.

But the comments also raise questions about how quickly China's economy, an engine of growth for the whole region, is cooling. The Singapore dollar was trading at $1.2587, from $1.2565 before the BHP comments and from $1.2548 late in New York.

Meanwhile, the direction of the U.S. dollar remains front and center in traders' minds this week, and the question is whether solid U.S. economic data combined with no new hints of monetary easing will pave the way for further gains for the greenback.

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