The Australian dollar slipped on Tuesday from a near two-month peak struck the previous day after bouncing around on comments from a Chinese sovereign wealth fund official that the US currency had hit a bottom. The Aussie recovered some of its losses after Peng Junming, an official in the asset allocation department of China International Corp, said the comments were his personal views.
Weak Australian economic data also contributed to the Aussie's fall. "Quite a few traders are left with grey hairs today," David Scutt, a currency dealer at Arab Bank Australia said about the statements. "The Aussie fell following the weak housing finance numbers and the Chinese comments on the US dollar. Once the market saw his comments were personal, a large short squeeze followed."
The Aussie traded at $0.9274, down from $0.9301 late on Monday and off a near two-month high of $0.9325 hit in offshore trade. It fell as low as $0.9235. The Aussie also eased against the yen, dropping from a near 16-month high of 86.20 yen to 85.51 yen, on further signs that the Chinese central bank was tightening liquidity conditions.