Australian Dollar strengthens on domestic payroll data
AUSTRALIAN DOLLAR REVIEW | The Australian Dollar reached a four month high of 1.4758 to the British Pound last week as optimistic domestic Payroll data exceeded expectations.
THE Australian Dollar reached a four month high of 1.4758 to the British Pound last week as optimistic domestic Payroll data exceeded expectations. The bullish move came after employment edged past expectations with a rise of 14,000 in July, while the jobless rate surprised with a dip to 5.2 precent. After the robust job report investors expect The Reserve Bank of Australia to cut interest rates further, even though earlier this week, the RBA held rates at 3.5 per cent and made no indication of imminent rate cuts.
The upside potential of the Aussie Dollar was limited due to the contradictory data released from China. On Thursday data released from China offered fresh evidence the world’s second biggest economy was slowing. “China’s exports rose 1 percent in July from a year earlier, following an 11.3 percent increase in June”, the customs bureau in Beijing said, as reported by Businessweek. Risk aversion moderated on the release of this data from China and specifically limited the upside of the Aussie Dollar due to China being Australia’s top export partner.
The upside of the increase in the Australian dollar is backed by the recent AAA rating and this increases the attraction of Australia’s foreign investment potentials thereby directly strengthening its currency.
Market sentiment expects the Australian Dollar to come under pressure in the coming week as negative headlines are appearing out of the world economy thereby reducing risk-taking behaviour. “Uncertainty over the global economic outlook is certainly a concern for growth-related currencies,” said Kengo Suzuki, a foreign-exchange strategist in Tokyo at Mizuho Securities Co, as reported by Bloomberg.
Exchange Rates at 09:58, 13 August 2012
Composed by Saskia Johnston of 1st Contact Money Transfers
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