WSJ:Australian Dollar Up Late After China Surprises On The Upside
Rates At 0550 GMT
Latest Change
AUD/USD 1.0632 +0.3%
AUD/JPY 84.50 -0.3%
6.50% May, 2013 4.4574% +0.04
4.50% Apr, 2020 4.9152% +0.003
10-Yr Spread To U.S. +205 bps -13 bps
SFE Jun 3-Year Futures 95.51 -0.03
SFE Jun 10-Year Futures 95.035 -0.015
SYDNEY (Dow Jones)--In an atmosphere of dense risk aversion as Europe's funding and debt crisis throws up new woes on an almost daily basis, the Australian dollar, traditionally a classic risk proxy, eked out some gains Wednesday helped by robust Chinese data.
China's second-quarter GDP rose 9.5% from a year earlier, compared with 9.7% growth in the first quarter, the National Bureau of Statistics said Wednesday. Economists had expected GDP to rise by 9.4%.
That result saw the Australian dollar reverse early-session losses to hit an intraday high of US$1.0648. At 0550 GMT, the Australian dollar was at US$1.0634, up from US$1.0622 late Tuesday. Against the Japanese yen, the Australian dollar was at Y84.50, down from Y84.72.
"We are confident that China will achieve 8.5% to 9.5% GDP growth this year and that will be enough to maintain strong demand for Australian exports," said Roland Randall, a strategist at TD Securities.
But earlier there were renewed signs of weakness in Australia. An index of consumer sentiment plummeted 8.3% in July from June, marking the lowest reading in the index in two years.
"The escalating sovereign debt crisis in Europe and weakening of business and consumer sentiment locally raise the bar for the Reserve Bank of Australia acting on its tightening bias," Citi economists said in a note.
The risk-averse tone means Australian bonds, while weaker on the day, continue to enjoy firm support from offshore buyers. Earlier Wednesday, the government sold A$700 million worth of 5.5%, 2023 dated bonds, drawing a coverage ratio of 3.44 times.
Bets that the Reserve Bank of Australia has finished its tightening cycle and may ease policy 35 basis points by the year's end is also helping demand.
For the offshore session, the focus for dealers is the semiannual testimony from Federal Reserve chairman Ben Bernanke.
--By Enda Curran, Dow Jones Newswires; 61-2-8272-4687; enda.curran@dowjones.com
