The Australian Dollar resumed its run of gains against the Pound on Monday as weaker than hoped for Chinese data raised the prospect of China introducing stimulus measures and as investors continued to maintain their bets that the Aussie Central Bank will raise interest rates within the year.
Early in the session the ‘Aussie’ initially dipped against the Pound, US Dollar and other major peers after the latest flash manufacturing PMI report out of China, Australia’s biggest trading partner came in below expectations.
According to the HSBC flash the PMI declined to its lowest level in eight months to 48.1 in March. The figure was a further decline from the 48.5 recorded in the previous month. Economists had expected a rise to 48.7. The poor data highlights growing concerns that China will not hit its GDP target of 7.5%.
The ‘Aussie’ rallied later in the morning as some economists raised their expectations that China may provide some type of stimulus measures to help the nation’s economy. Some economists do not agree.
“I don’t subscribe to that view. Policy makers are offering nothing but ‘tough love’ here. We’ve seen no fresh policy developments other than to introduce further market forces in Chinese financial markets. For the moment, the Aussie is trading as if it is trying to adopt this strange logic,” said the chief of currency strategy at Westpac.
Also aiding the ‘Aussie’ are the continued expectations that the Reserve Bank of Australia will raise interest rates within the year as the nation’s economy continues to improve.
Further gains could be limited due to an increase in tensions in Ukraine. Over the weekend Russian forces stormed three Ukrainian military bases in the Crimea increasing tensions and raising the prospect of retaliation by Ukrainian forces. A Ukrainian soldier told Reuter’s news agency that shots had been fired and confirmed that the bases had been taken over.
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,0.9102 ,
Australian Dollar,,Euro,0.6605 ,
Australian Dollar,,Pound Sterling,0.5523,
Australian Dollar,,Canadian Dollar,1.0226 ,
[/table]
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