The Australian Dollar rallied against the Pound, Euro and US Dollar on Friday after inflation data out of China bolstered demand for riskier higher yielding assets.
The ‘Aussie’ rebounded from Thursday’s lows after the inflation report out of China showed that consumer prices in Australia’s biggest trading partner increased by 2.5% in January from the previous year. The figure beat economist forecasts for an expected increase to 2.4%. A separate report showed that China’s producer price index fell by 1.6% in line with economist forecasts.
Following the release of the Chinese data demand for riskier assets climbed.
The ‘Aussie’ could have pushed higher against its major peers but was restrained by comments made by Reserve Bank of Australia Assistant Governor, Christopher Kent. Mr Kent said that the currency could fall further to aid the nation’s exporters.
The currency is still forecast to decline before the years end with Goldman Sachs Group Inc continuing to expect that the AUD/USD rate will fall to 88 cents in six months and 85 cents by the end of the year.
“Unhedged capital inflows are set to become less A$ positive, which in turn will allow the Australian Dollar to reconnect with its weaker fundamentals. We think it is too early to rule out the possibility of the RBA providing further monetary policy stimulus,” said Tim Toohey, head of economics, commodities and strategy research for Australia and New Zealand at Goldman Sachs.
With the AUD rate stronger than expected at the moment now is probably a good time to trade he currency before the expected weakness sets in.
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,0.9028 ,
Australian Dollar,, Pound,0.5405 ,
Australain Dollar,,Euro,0.6598 ,
Australian Dollar,,New Zealand Dollar,1.0781 ,
US Dollar,,Australian Dollar,1.1075 ,
Euro,,Australian Dollar,1.5156 ,
Pound,,Australian Dollar,1.8497 ,
New Zealand Dollar,,Australian Dollar,0.9273 ,
[/table]
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