THE Australian dollar is trading slightly below parity with the US dollar as commodities prices fell following weaker than expected Chinese data.
At 1700 AEST on Tuesday the currency was trading at 99.79 US cents, down from Monday's close of 100 US cents.
JP Morgan currency analyst Anna Hibino said the local currency was now trading around a critical level, near parity with the US dollar.
"The weakness isn't attributable to domestic factors," she said.
"Part of it has to do with slightly weaker numbers from China on Tuesday and commodity prices are a bit off.
"Those things could be the main reason for the Aussie's weakness."
China reported a 9.3 per cent rise in industrial output for April, which was just below the 9.5 per cent level expected by economists.
The drop in the local currency also comes as investors anticipate stimulus efforts in the US will be wound back.
The local unit fell on Monday night in offshore trading and continued to struggle on Tuesday after US Commerce Department data showed a retail sales increased by 0.1 per cent during April.
While the rise was unspectacular, it was more upbeat than market forecasts of a 0.3 per cent drop and boosted the US dollar against most major currencies.
News of a 5.2 per cent jump in Australian home loans in March, a better than expected result, was largely ignored by the market that was more focused on the global economy.
Ms Hibino said the Australian dollar was likely to trade around 100 US cents for the time being.
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