The Australian dollar rose from near its weakest level since September 2010 as Chinese data showed second-quarter growth slowed in line with economists forecasts.
The Aussie gained against all its 16 major peers after data from China, Australia’s biggest trade partner, showed its gross domestic product grew 7.5 percent last quarter from a year earlier. The Australian dollar dropped last week after Chinese Finance Minister Lou Jiwei said the country’s growth target this year is 7 percent, lower than the official goal of 7.5 percent, comments which were later revised in a report by the state-run Xinhua News Agency.
“At the margin, the Chinese GDP data is supportive for the Aussie given the exaggerated growth fears prompted by the Chinese finance minister’s comments late last week,” said Sue Trinh, a senior currency strategist at Royal Bank of Canada in Hong Kong. “Hence, the Aussie dollar is holding small gains.”
The Australian dollar rose 0.4 percent to 90.86 U.S. cents as of 4:57 p.m. in Sydney from last week, when it fell as low as 89.99 cents. The currency climbed 0.6 percent to 90.30 yen. New Zealand’s dollar rose 0.3 percent to 78.04 U.S. cents and gained 0.3 percent to 77.56 yen.
The Aussie has tumbled 9.9 percent in the past three months, the worst performer among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The kiwi slid 4.5 percent.
In an English-language story released July 13 and dated the previous day, Xinhua said it corrected a quote attributed to Lou to “there is no doubt that China can achieve this year’s growth target of 7.5 percent” from its original story dated July 11 that cited him as saying “there is no doubt that China can achieve the growth target, though the 7 percent goal should not be considered as the bottom line.”
GDP in the world’s second-largest economy expanded 7.5 percent in the April-June period from a year earlier, from 7.7 percent in the first quarter, the National Bureau of Statistics said in Beijing today.
Traders should sell the Australian dollar if its gains toward 91.60 cents, according to IG Markets Ltd., as further declines are likely given recent Reserve Bank of Australia commentary that’s weakened the currency.
The RBA said after its July 2 policy meeting that inflation will remain in line with targets over the next one to two years, while further currency declines would help to rebalance growth. Minutes from that meeting are due tomorrow.
“There are a growing number of analysts calling for an August rate cut, and the RBA has been trying to talk down the Australian dollar at the same time,” said Stan Shamu, a Melbourne-based market strategist at IG Markets. “If we get more rhetoric about the reasons for a cut, we could see another round of Aussie selling.”
There is about a 66 percent chance the RBA will lower rates next month to 2.5 percent from a record low 2.75 percent, according to Bloomberg calculations based on swaps. Australia’s 10-year bond yield fell two basis points to 3.73 percent, and the three-year rate declined two basis points to 2.64 percent today.