China’s GDP was very strong. The currency that benefits the most is the Aussie, which settled above an important line. Update on this strong currency.
Growth in China was very strong – an annual rate of 11.9% in the first quarter of 2010. This is better than Q4’s growth of 10.7%, and also better than early expectations. This figure isn’t alone:
Update: 10:00 GMT – it seems that the fresh worries about Greece are endangering the Aussie’s achievements.
China’s industry, which buys materials from Australia, showed an annual growth rate of 18%, very strong as well. Additional figures also came out of China, showing that this giant is pushing forward. When Australia’s main trade partner is growing, the Australian economy can be safe and sound.
It’s important to note that a second-tier Australian figure, inflation expectations from th Melbourne Institute, also supported the Aussie. It climbed to 4.1%, after many months around 3.2%. This is the highest outcome since September 2008 – since the big outbreak of the crisis. Higher inflation expectations mean a bigger chance for a rate hike. There are doubts about the next meeting of the RBA, after the fifth rate hike.
Indeed, the Aussie can feel better now. AUD/USD struggled with the 0.9327 resistance line many times in recent months, and approached it near the end of last week once again. The bailout plan for Greece sent it with a weekend gap over the line, near 0.94, but it quickly fell down, going as low as 0.9223.
A new attempt began before the releases from China, and it seems to work now. AUD/USD went as high as 0.9364, and trades above 0.9327. The current range is between 0.9327 and 0.9405, the 2009 high.
Even higher, 0.95 was a support line back in 2008. It’s followed by 0.9650 which served as a resistance line back then. The all-time high of 0.9849, reached in July 2008 is next line, and AUD/USD parity is too far now.
If fresh fears on the Greek bailout plan arrive to the markets, like the court challenge prepared by German professors, the Aussie could give drop, not so fast though, and receive support at 0.9260.
I continue the being bullish on the Aussie.
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