Yesterday Westpac’s Global Strategy Team sent a note to clients in which it set a one-month target of 96 cents for the Aussie dollar.
While this was largely based on the Aussie being driven by the “global mood, which we expect to be mostly USD-negative”, the Aussie is getting significant support in its own right from the continued recovery in Chinese data, which was in evidence again yesterday with the release of the HSBC Chinese manufacturing PMI which climbed to a six-month high of 51.2 from 50.1 last month.
This continues a strong recovery in Chinese and BRIC data which so disappointed from May to August. It’s a recovery that is taking the Aussie dollar along for the ride.
As the re-emergence of growth in the emerging world takes hold in the psyche of traders and investors, it suggests further stabilisation in the Australian economy, which looks increasingly likely to prove more resilient than many feared just recently.
So the buyers are in and the Aussie dollar has regained a big slab of the weakness we saw on Friday night. It rose 0.84% to 0.9446 this morning after a low yesterday of 0.9362.
The Aussie is climbing a wall of worry at the moment and hardly anyone wants to be too bullish about it. Can it surprise?
It’s going to be interesting to watch where it heads in the weeks ahead.
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