Australian Dollar Up on China Data

 
   By James Glynn 
 

        SYDNEY--The Australian dollar edged higher Tuesday bolstered by news inflation in China fell to its lowest level five years, opening the door to interest rate cuts there.
        At 0610 GMT, the Australian dollar was changing hands at US$0.7818, up from US$0.7764 late Monday.
        China is Australia's biggest trading partner, buying huge amounts of iron ore, the country's biggest export.
        China's consumer-price index rose 0.8% year over year in January, below an already-low 1.5% year-on-year rise in December, according to data from the National Bureau of Statistics. The pace fell slightly below expectations of a 0.9% rise.
        "Today's data confirmed the economic slowdown in January, while intensifying disinflation will weigh further on firms' profit margins. This increases the need for further monetary easing," said Julia Wang, economist at HSBC.
        Locally, data was mixed.
        Consumer confidence was weak last week despite a surprise cut in interest rates. The ANZ-Roy Morgan index of consumer confidence fell 0.6% to 111.7 from a week earlier.
        "Consumer confidence continues to show a disappointing lack of momentum," said Warren Hogan, chief economist at ANZ. "Households are clearly concerned about the economic outlook and job security."
        The Reserve Bank of Australia cut interest rates last week to a record low 2.25%, from 2.50%, coming off the sidelines for the first time since August 2013 in response soft inflation pressures, stalling growth, and the global trend among central banks to ease policy setting as oil prices fall.
        Data on house prices showed a solid lift in the fourth quarter.
        House prices rose by 6.8% from the same quarter a year earlier, the slowest pace of year-on-year growth since the second quarter of 2013.
        In the country's commercial capital, Sydney, house prices rose by 3.4% in the fourth quarter from the third. Perth, in resource-rich Western Australia state, recorded a 0.3% gain--the weakest among the state capitals. In Darwin, in the Northern Territory, house prices fell by 0.6%.
        -Write to James Glynn at james.glynn@wsj.com
        (END) Dow Jones Newswires

        February 10, 2015 01:28 ET (06:28 GMT)

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