Aussie Dollar Rises to Two-Week High After Growth Beats Estimate
Australia’s dollar rose to a two-week high after data showed second-quarter gross domestic product grew at a faster pace than economists had predicted.
The Aussie added to gains from yesterday which came after the Reserve Bank of Australia left interest rates unchanged at a record low and omitted mention of further scope to ease policy. The nation’s three-year bond yield, which is influenced by RBA expectations, rose to its highest level since July 8.
“The Aussie has jumped up on the GDP news because the number was a little better than markets were anticipating,” said Besa Deda, the chief economist at St. George Bank Ltd. in Sydney. “The data is still supportive of our view that the RBA may need to do more, and we think that one more rate cut in November is likely.”
The Aussie rose 0.7 percent to 91.28 U.S. cents as of 4:57 p.m. in Sydney, after climbing 1 percent yesterday. It touched 91.28, the most since Aug. 20. The currency gained 0.8 percent to 90.98 yen and earlier reached 91.05, the most since July 29.
New Zealand’s kiwi dollar added 0.8 percent to 78.58 U.S. cents and rose 0.9 percent to 78.34 yen.
The Aussie may extend gains after rising above its 10- and 21-day moving averages and will face selling pressure toward 91.20 cents, Deda said.
Australia’s GDP rose 0.6 percent in the second quarter from the first quarter, compared with the 0.5 percent expansion predicted by the median economist estimate in a Bloomberg News survey. From a year ago, it gained 2.6 percent versus a 2.4 percent forecast.
“The move back above 90 cents now turns into near-term support and it looks like a lot of traders are happy to ride it a little higher in the short term,” said Stan Shamu, a strategist at IG Ltd. in Melbourne. “The RBA did sound a little less dovish and seem to have a wait-and-see approach given they’ve already put a lot of cuts through the system.”
The central bank yesterday kept its benchmark rate at 2.5 percent following 2.25 percentage points of reductions since since November 2011. In a statement following the decision, Governor Glenn Stevens said the RBA will adjust policy “to foster sustainable growth in demand and inflation outcomes consistent with the target.”
Australia’s 10-year bond yield rose three basis points to 4.02 percent today. The three-year rate climbed seven basis points to 2.87 percent and touched 2.90, the most since July 8. A basis point is 0.01 percentage point.
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