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Aussie lifted by China

The Australian dollar is higher versus the US dollar after Beijing revealed a growth rate that didn’t disappoint.

All trading involves risk. Losses can exceed deposits.

The strength of the Australian dollar over the past few years has been down to the phenomenal growth of the Chinese economy, because China is a major consumer of Australian minerals such as iron ore.

Overnight Beijing revealed a second-quarter gross domestic product of 7.5%; this is down from 7.7% in the first three months of the year, but is nonetheless in line with expectations. Traders bought the Australian dollar on the back of this news as they felt that solid Chinese growth will require natural resources to fuel its economy, and will in turn provide a boost to the Australian economy.

The Reserve Bank of Australia (RBA) will make a statement tomorrow. Interest rates are already at record lows and if the RBA mentions the possibility of cutting rates even lower we could see the Australian dollar fall below the $0.9 mark.

In the US, Esther George of the Federal Reserve will issue a statement on Tuesday at 7.15pm (London time). If Ms George talks about trimming the bond-buying programme, we could see dealers sell the Australian dollar versus the US dollar.

Spot FX AUD/USD chart

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