WSJ:Australian Dollar Up Late As Data Lifts Gloom; China PMI Solid
Rates At 0640 GMT
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SYDNEY (Dow Jones)--The Australian dollar was stronger late Thursday supported by a batch of solid data which helped lift the gloom that has hung over the economy in recent weeks.
News on the Chinese economy was also more upbeat, giving the currency additional zest. China's official Purchasing Managers Index rose slightly in August, posting its first gain since March.
China's PMI rose to 50.9 in August compared with 50.7 in July, according to the China Federation of Logistics and Purchasing, which issues the data with the National Bureau of Statistics.
Qu Hongbin, HSBC's co-head of Asian Economics, said it suggested the Chinese economy, which consumes vast amounts of Australian coal, iron ore and gas, is on track for a soft landing, rather than a dramatic slowdown.
"It confirms our view that China will only see growth moderate, not collapse, in the coming months," he said.
Locally, business investment in the second quarter was strong, suggesting the economy will spring back from a dismal flood-affected first quarter. The outlook for investment remained solid, with the bulk of the increase occurring in the mining sector, economists said.
Private new capital spending on buildings and equipment rose 4.9% to A$33.82 billion in the second quarter of 2011 from A$32.24 billion in the first quarter, the Australian Bureau of Statistics said.
Retail sales also rose a higher-than-expected 0.5% to a seasonally adjusted A$20.65 billion in July, the bureau said.
"Although both data points were encouraging, we would argue the capex data will carry the most weight with the Reserve Bank of Australia and supports their expectations for a return to above trend growth next year," said Michael Turner, strategist at RBC Capital Markets.
At 0640 GMT, the Australian dollar was at US$1.0715 up from US$1.0689 late Wednesday. Against the Japanese yen, the Australian dollar was at Y82.285, up from Y81.84 Wednesday.
-By James Glynn, Dow Jones Newswires; 61-2-8272-4685; james.glynn@dowjones.com
