The AUD Exchange rate has remained relatively stable this week; this is mainly due to the lack of higher tiered data. Investors were relying on some early movement this week caused by China. However, The Chinese releases came out with mixed fortunes from both their GDP figure and Industrial Production. The GDP figure came in at 10 basis points above expectations and the lesser anticipated Industrial Production figure came in at 30 basis points below expectations. Overall the Chinese figures did not change the exchange rates in any particular direction.
More recently, the Chinese economic figures have come under scrutiny as they were allegedly ‘Man made’ and they do not represent a true value of the current strong economic strength. It seems that the market has begun to price this factor into exchange rates; the AUD/USD exchange rate, for example, has lost 1.2 cents since China released the figure on Monday. The actual GDP figure is calculated to be around 3% level; almost 3.5% less than the official GDP figures. This figure is determined by monitoring the electricity consumption, rail cargo volume and bank lending to receive a precise sense of growth.
To end the week, the Australian Economy will release their quarterly Business Confidence figure. The figure more recently has struggle at a month on month level; therefore the recent releases have placed a lower expectation on today’s quarterly release. Earlier this morning, the RBA’s Assistant Governor Malcolm Edey made a minor announcement at the international Swaps and Derivatives Association. The announcement should not lead to an increase in volatility to the market today, as the larger more anticipated announcements will typically come from the “big fella” Glenn Stevens, Governor of the RBA .
Next week is a week full of high tiered data from across the globe, including GDP figures from the UK, Canada and the USA. Adding to this is the much anticipated inflation level results from Australia and also a possible fourth consecutive interest rate cut for New Zealand.
Exchange rates should remain relatively stable for the rest of the week, possible some last minute movement from the EUR as the monthly European PMI data is expected to be released slightly weaker than the previous releases; this should end the EUR/AUD lower at close of market.