The Australian dollar is trading lower today after weak data out of China, giving up some of the gains it made after reports that US president Barack Obama told a G7 meeting over the weekend that he was concerned about the high level of the American currency.
At 8.26am (GMT) the Aussie dollar was trading at US 76.59c down from US77.01c in yesterday’s trade.
Obama denied making the statement about the green back with a US official noting that it’s not just the problem of a high currency, but a number of other factors holding back economic growth,
"He (Mr Obama) made a point that he has made previously, a number of times: that global demand is too weak and that G7 countries need to use all policy instruments, including fiscal policy as well as structural reforms and monetary policy, to promote growth," the official said.
Data out of China showed the consumer price index out of China fell in May to 1.2% down from 1,5% in April while the producer price index came in at -4.5% slightly down from -4,5% a month earlier.
"We are basically in the midst of a balance sheet recession with Chinese characteristics," said Andrew Polk, economist at the Conference Board in Beijing. "Companies and banks are busy repairing their balance sheets, and that suppresses borrowing appetite."
He also noted that the economy would require a "dramatic" reduction to interest rates combined with more government spending.