The Australian dollar hits a 10-month high, all eyes turn to Chinese GDP

Photo by Natalie Behring-Chisholm/Getty Images)

The Australian dollar continued to push higher in overnight trade, rising to as high as .7736 against the US dollar, the highest level seen since July 1 last year.

In recent trade, the Aussie has slipped back below the 77 cent level, buying .7690 as at 8am AEST. Despite the modest pull back, at .7695, Thursday’s closing level was still the highest since June 30 last year.

The surge, taking its gains from January 15 to 13.4%, came despite renewed weakness in commodities such as crude oil, iron ore and gold.

Richard Grace, chief currency strategist at the CBA, put the Aussie’s continued strength down to Australia’s strong jobs report for March released on Thursday, something that revealed robust employment growth and an unemployment rate at the lowest level seen since September 2013.

“AUD/USD has lifted to a fresh cyclical high and outperformed on the crosses in overnight trade,” wrote Grace in his morning note.

“The better than expected Australian labour force report for March was the catalyst as the European and American time zones had their chance to react to the improved Australian economic data. The unemployment rate is now appreciably below its 6.3% peak set in 2015 and is moving lower in the direction of the RBA’s forecast.”

Looking ahead to Friday’s trading session in Asia, Grace believes movements in the Aussie will likely be dominated by the release of a raft of Chinese economic data, including Q1 GDP.

“We think the risks are to the downside,” says Grace. “A softer set of Chinese data should take some of the steam out of the AUD into the end of the week and generate some modest intra-day volatility.”

Markets expect the economy to have grown 6.7% from the first quarter of 2015, marking the slowest year-on-year increase seen since the March quarter 2009 should the figure meet expectations.

Although the CBA sees downside risks to the GDP figure, it should be noted that the number has either met or exceeded expectations in each of the past five occasions it has been reported.

The GDP report, along with monthly figures on industrial output, retail sales and urban fixed asset investment are all scheduled for release at 12pm AEST.

Here’s the current Australian dollar scoreboard.

  • AUD/USD 0.7690 , -0.0005 , -0.06%
  • AUD/JPY 84.14 , -0.02 , -0.02%
  • AUD/CNH 4.9906 , -0.0042 , -0.08%
  • AUD/EUR 0.6826 , -0.0002 , -0.03%
  • AUD/GBP 0.5434 , -0.0002 , -0.04%
  • AUD/NZD 1.1228 , 0.0003 , 0.03%

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