The Australian dollar dropped to the lowest in three and a half years, after China`s GDP growth data were released showing disappointing expansion in the fourth quarter of last year, which added more pressures on the Australian currency. China`s data always have a direct effect on the performance of the Australian dollar, since China is Australia`s main trade partner. Lower expansion rates in China means that trade between both nations will be negatively affected, which encouraged traders to sell AUD. Moreover, there are forecasts in the Australian market saying the central bank will cut interest rates, noting that inflation is declining, giving a chance for policy makers to make their decision early this year. Australia`s consumer prices index is on queue this week, which is going to affect the currency`s moves against major currencies and it will also affect the central bank`s decisions. AUD/USD is trading around 0.8795, after the pair recorded the lowest in more than three years at 0.8755. AUD also dropped against the Japanese yen to the lowest in two and a half month at 91.03, since the beginning of this week, while the pair is currently hovering around 91.45.
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