The Australian Dollar climbed to its highest-level in two months against the US Dollar after data out of China beat economist forecasts, but fell against the Pound after Bank of England Governor Mark Carney hinted that UK interest rates could rise before the end of the year.
As China is Australia’s biggest trading partner any positive news out of the Asian nation tends to have a strengthening effect on the ‘Aussie’ and today’s data was no exception to the rule.
The data showed that China’s economy is stabilising after Beijing introduced a number of targeted stimulus measures earlier in the year as a means to counter a slowdown that was threatening to take hold.
Retail sales in the world’s second largest economy increased by 12.5% in May better than the 12.1% forecast by economists. The rise was the best figure seen since December last year.
A separate report showed that industrial output in the nation increased by 8.8% last month largely in line with forecasts. Fixed asset investment increased by 17.2% year-on-year, just ahead of expectations for a figure of 17.1%.
“It does look like we are getting a bounce in economic activity, helped by stimulus. The numbers are not earth shattering but they are reassuring given concerns about China’s real estate market,” said Bank of Singapore Chief Economist Richard Jerram.
The Australian Dollar also found support from demand for safer assets as the conflict in Iraq intensifies.
The Pound meanwhile made gains against the Australian Dollar and the majority of its most traded peers following comments made by Bank of England Governor Mark Carney which hinted that the Central Bank plans to raise interest rates by the end of this year.
“There’s already great speculation about the exact timing of the first rake hike and this decision is becoming more balanced. It could happen sooner than markets currently expect,” said Mr Carney In a speech given at the Mansion House in the city of London financial district yesterday.
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,0.9416 ,
Australian Dollar,,Pound Sterling,0.5544 ,
Australian Dollar,,Euro,0.6941 ,
Australian Dollar,,New Zealand Dollar,1.0854 ,
US Dollar,, Australian Dollar ,1.0626 ,
Pound Sterling,, Australian Dollar ,1.8036 ,
Euro,, Australian Dollar ,1.4415 ,
New Zealand Dollar,, Australian Dollar ,0.9212 ,
[/table]
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