Currency Update: The Australian dollar benefited again from better than expected data out of China and traded just above the .9200 level on Friday night as concerns about lower Chinese growth abated. With a market generally short the #AUD, better figures from China on Friday afternoon helped push our local currency higher again on Friday. With exports in the world’s second largest economy higher by 5.1% last month as compared to predictions of 2% growth and better recent PMI’s there seems to a floor to the Chinese growth story of 7 to 7.5% pa which has helped push the AUD higher. Industrial production rose by 9.7% which is the highest since July of last year and fixed asset investment met guidelines with a rise of 20.1%. Retail sales were up 13.2% from a year ago for July. #Inflation also seems to be in check with the CPI steady at 2.7% although the PPI fell by 2.3% from the figure a year earlier. These figures overshadowed the #RBA’s release of their Quarterly Statement on Monetary Policy on Friday. The RBA has lowered their #GDP growth forecast for the end of 2013 from 2.5% to 2.25% and for mid-2014 to 2.5% from a previous range of 2% to 3%. Their forecast for growth remains at 2.5% to 3.5% for the end of 2014. They see growth picking up significantly as natural gas exports come on stream by the end of 2015 with a range of 2.75% to 4.25% in GDP growth. Again they reiterated the benefits of a lower AUD in future growth of economy saying a reduction in the exchange rate of 10% translates into an extra 0.5% to 1% in GDP growth over the next two years. They see inflation as a non-issue over the next several years but made no mention of an easing bias. With such a lacklustre growth forecast in the near term, some analysts continue to believe there is at least one more reduction in the cash rate coming before the end of 2013. There is a bit of a lull in local data this week with some credit card numbers due out today followed tomorrow by #NAB business conditions survey and the federal Treasury’s pre-election fiscal and economic outlook that was foreshadowed by Treasurer Chris Bowen last week. Today’s Forecast Range: #USD 0.9150 – 0.9215.
Posted on: Sun, 11 Aug 2013 23:20:58 +0000
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