The AUD to USD exchange rate advanced to its best level of 2014 so far as economists expect the Reserve Bank of Australia to not make any more interest rate cuts and hope that the Chinese authorities will implement stimulus measures following yesterday’s poor manufacturing data.
The AUD/USD reached 91.58 overnight before settling in the region of 91.46.
The ‘Aussie’ has defied expectations for the currency to decline after China posted a second consecutive disappointing manufacturing report. The last weak report sent the currency tumbling and economists had expected it to happen again, this time however the Australian currency has remained stubbornly high and even pushed higher.
The cause for the rise comes as economists hope that the run of weak data could prompt the Chinese government to introduce easing measures in order to support the world’s second largest economy. Inflows of cash as a result of Chinese investors withdrawing their funds from China and placing them into Australia also aided the ‘Aussie’s’ push higher.
“While the first quarter growth number in China’s probably going to be a little bit slower, they do have lots of ammunition to make sure that growth doesn’t slow down too far. It may be a case of looser monetary policy, but perhaps more likely fiscal policy, where there is plenty of spending on infrastructure that is already planned in China in their five-year plan and could be brought forward,” said Westpac senior currency strategist Sean Callow on the prospect of China introducing stimulus.
All eyes will now turn to Wednesday’s speech by RBA Governor Glenn Stevens. The Governor could attempt to talk down the currency due to its recent surge higher.
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,0.9146 ,
Australian Dollar,, Pound Sterling,0.5542 ,
Australian Dollar,,Euro,0.6609 ,
Australian Dollar,,Canadian Dollar,1.0237,
[/table]
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