Aussie sent lower again on economy concerns

LONDON: The Australian dollar skidded lower on Wednesday after a consumer confidence gauge triggered fresh concerns about a slowing economy.

Sterling was the other big mover, adding more than half a percent on hopes British lawmakers will vote later on Wednesday against a disruptive "no-deal" exit from the European Union.

Foreign exchange markets elsewhere were mostly quiet, with investors reluctant to take risks as the cautious mood in Asia spread to Europe.

A measure of Australian consumer confidence slumped to its lowest in over a year in March, adding to recent signs of  weakness in the economy. Sentiment in China, a major trading partner for Australia, also deteriorated on Wednesday with Chinese share prices falling.

The Aussie has been sensitive to signs of a loss of economic momentum, particularly after the Reserve Bank of Australia's upbeat outlook last week failed to dispel bets it would have to lower rates eventually.

The Aussie fell half a percent to as low as $0.70495, although the currency was above two-month lows of $0.7003 touched last week. It had recovered to $0.70615 by 1000 GMT.

"Yields have come off, stock markets are in the red and in FX land, USD and JPY (Japanese yen) are outperforming at the expense of AUD and NZD (New Zealand dollar), particularly after softer domestic data," said Sue Trinh, an analyst at RBC Capital Markets.

Trinh said the weak March consumer confidence data in Australia highlighted "continued weakness in consumer spending", and especially a slowdown in the country's property market.

The New Zealand dollar, which often tracks the Australian currency because the two economies are closely linked, also fell, by 0.3 percent to $0.6838.

The euro made a small move upwards after better-than-expected euro zone industrial production numbers for January. The single currency rose 0.1 percent to as high as $1.1302.

The U.S. dollar index was slightly lower, at 96.902 against rival currencies.

Tuesday's softer-than-expected U.S. February inflation data and falling U.S. government bond yields have dented dollar demand, analysts said.

MUFG analysts noted that euro/dollar had "fully reversed last week's sell-off following the dovish ECB (European Central Bank) meeting".

The Japanese yen held firm at 111.36 yen per dollar .

Sterling added 0.7 percent against the dollar and the euro.

Prime Minister Theresa May lost a second attempt on Tuesday to get her Brexit withdrawal agreement passed by parliament. But sterling's losses have been tempered because most investors are confident Britain will avoid a chaotic "no deal" Brexit and instead seek to postpone its set March 29 departure date.

The pound has had a rollercoaster ride this week, its range varying 3-1/2 cents against the dollar.