The Australian Dollar climbed to its highest level in two and a half months on Wednesday due to strong data showing that the Australian economy posted solid growth in its exports to China, the country’s largest trading partner, over the past year.
China imports vast amounts of coal and iron ore from Australia to fuel and supports its continuing economic expansion as a result the value of Australian exports to the country soared by 18.4% and overall shipments into China rose by 14.1%. Economists had been predicting an increase of just 6%. The huge rise in imports contrasted with a decline in exports as China posted a trade deficit of $880 million.
“The market is putting more focus on the fact that imports have rebounded very strongly,” said Khoon Goh, a senior strategist at Australia & New Zealand Banking Ltd. in Singapore. “Given that China imports from Australia, that is seen as benefiting Australia. Near term, there’s scope for the Aussie to go higher.”
The strength of the ‘Aussie’ was also supported by comments made by the Reserve Bank of Australia board member John Edwards, who said that the elevated value of the currency was creating pain for exporters but it was not at a level that required an interest rate cut.
Markets will now focus on the latest employment data which is due for release early Thursday morning. Economists are expecting to see that 10,000 jobs were lost over the last month, with the unemployment rate set to remain at 5.4%. A worse-than-expected figure could see the ‘Aussie’ retreat.
Comments are closed.