The Australian dollar slumped to a new multi-year low on Wednesday as the third quarter GDP data from the country disappointed market participants in a big way amid expectations of a stronger jobs data from the US later in the week.
AUD/USD fell to 0.8337, its lowest since July 2010 as compared to the previous close of 0.8447. The pair which was down on Tuesday as well, could head for its third straight week of losses.
The Australian economy expanded 2.7% from a year earlier in the three months to September, data showed on Wednesday. It matched the Q4-2013 number and compares with the Q2 reading of 3.1% which analysts expected will repeat this time.
The quarterly growth too came well below expectations at 0.3%, which was its lowest since 2011. The Q2 print was 0.5% and the consensus was for a rise to 0.7%.
Detail showed that gross fixed capital formation in Australia fell 2.2% seasonally adjusted on quarter and 2.8% year-on-year. The terms of trade dropped 3.5% and 8.9% respectively, dragging the GDP growth rate.
Australian dollar had edged higher early on Tuesday as the Reserve Bank of Australia did not prefer to add any dovish lines to the monetary policy report for December mainly helped by better than expected building permits and trade data.
But the Aussie dollar weakened later in the day tracking the broad greenback rally and taking cues from the China PMI numbers released earlier in the day.
The China NBS manufacturing PMI fell to an 8-month-low of 50.3 in November from 50.8 in the previous month, data showed on Tuesday.
Indications of slowing demand in China will directly hurt Australia as the world's second largest economy is its biggest export destination.
The market is now waiting for Friday's US non-farm payrolls as a surprise in that can well impact the overall greenback strength, in turn moving the rest of the forex world.
Market expectations are for a rise US non-farm employment addition to 232,000 from 214,000 recorded for October.