The Australian Dollar managed to achieve its highest level of the year so far against the Pound and US Dollar after risk sentiment improved following the publication of positive data out of the world’s second largest economy, China.
The ‘Aussie’ found support last night after US Federal Reserve Chairman Janet Yellen told the US Congress that she was confident that the US economic recovery is on the right track and that the tapering of the Central Bank’s monetary easing programme will continue.
Following Yellen’s comments the ‘Aussie’ climbed against the Japanese Yen, a positive sign according to some economists.
“It looks as though the main theme was positive risk sentiment. AUD/JPY is getting increasingly popular. That’s a very risk sensitive cross, so for AUD/JPY to be rallying, it means that the world is a lot more optimistic,” said one economist.
The withdrawal of the Fed’s stimulus, which has pumped “cheap money” into global markets, had previously seen investors flee from risky assets such as the Australian dollar.
Bolstering the ‘Aussie’ was the release of data out of China, Australia’s biggest trading partner. Chinese exports soared 10.6% in January; a six-month high and far exceeded economist expectations for a 2% rise. Imports meanwhile also jumped by 10% and beat expectations. The data reduced fears that the Chinese economy was slowing down.
Economists widely ignored a report released by Westpac which showed that consumer sentiment fell by 3% in February.
Tomorrow sees the release of unemployment data which is forecast to show that the number of Australians out of work rose in January. If the report does show a rise in unemployment then we can expect the ‘Aussie’ to retreat and give up some of its recent gains.
Australian Dollar (AUD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Australian Dollar,
,US Dollar,0.9054 ,
Australian Dollar,,British Pound,0.5500 ,
Australian Dollar,,Euro,0.6636 ,
Australian Dollar,,Canadian Dollar,0.9953 ,
[/table]
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