The Australian Dollar has gone from strength to strength this week. Trading at a three week high of 0.94672 against the US Dollar on Thursday after the third positive indicator for the Australian Dollar.
Our first gain came early in the week off the back of The Governor Glenn Stevens of The Reserve Bank of Australia speaking at the Anika Foundation Luncheon. As a rarity, Governor Stevens didn’t make any particularly negative comments relating to the currency. He didn’t make any significant mention on the Dollar, rather speaking on the economy and the G20 agenda. After the speech we had some strength for the Australian Dollar.
The large gain for the Australia Dollar came on Wednesday off the back of the Australian Consumer Price Index, (CPI) with a result of 3.0%. This is the upper limit of the inflationary target for the Australian economy under the Reserve Bank of Australia’s inflationary policy targets. This result provided immediate and substantial strength to the AUD against all the majors and minors as this information provides a firm indication that it will be unlikely that The Reserve Bank of Australia will be able to lower interest rates for at least the remainder of the year for risk of hyperinflation.
As investors digested this information and with no further significant data out of the Australian Economic calendar for the week, it was possible that the AUD would lose some of the initial excitement off this positive signal. However, Chinese Manufacturing PMI data released at 11:45am AEST Thursday was again above the expansion v contraction mark of 50.0 at a result of 52.0, which was a gain on the previous month. As Australia’s largest trading partner, this data is usually a market mover for the AUD and this positive result provided further strength to the AUD as it reached up to three week highs against the majors breaking the 0.70 against the EUR.
Overnight the Australian Dollar has fallen again marginally and wasn’t able to break the psychological barrier of 0.95 against the USD as it did briefly at the commencement of the month. With no further data out of Australia or China for the reminder of the trading week and no further data of significance for Australia early next week either.
US jobless claims came out last night with a reduction in jobless claims compared to last month, a positive result for the US economy. US Manufacturing PMI data came out with a result of 56.3, and although this is a lower figure than the previous reading of57.3, this result is still safely in economic expansion territory, and didn’t therefore provide any significant negativity to the USD as a result.
It is unlikely that we will see this temporary strength in the AUD continue as the week will close with US Durable Goods figures scheduled to be released tonight and a big week for the US next week in terms of economic data.