During February, the Australian dollar suffered from global fear and lost value. The boomerang came thanks to the new forex dynamics: issues in Europe had little influence on the Aussie and other commodity currencies.
The Aussie enjoyed its own better fundamentals. But will these be enough to tackle the tough resistance line?
Update: Chinese GDP badly disappointed with a rise of only 7.7% in Q1 2013. This sent AUD/USD plunging.
* This article is part of the April 2013 monthly forex report. You can download the full report by joining the newsletter in the form below.
- Jobs: Australia enjoyed two good employment reports: in January, Australia gained 13.1K jobs and in February it gained a whopping 71.5K jobs. However, many of these jobs are part time jobs. So, the next employment report will be closely watched: a big loss of jobs cannot be ruled out after the big leap.
- GDP: The Australian economy continued growing nicely in Q4: 0.6% and probably grew in Q1. It’s hard to believe that a contraction was seen, especially as Chinese demand remained strong.
- Capital Expenditure: This could be a cause of worry: this figure dropped by 1.2% instead of rising by 1.1% as expected. The RBA watches this figure.
- Mining: After the big debate about “the end of the mining boom”, things are quieter down under. This doesn’t mean everything is perfect, just that the talk is calmer.
- Rise in retail sales: Outside the mining sector, Australia’s economy didn’t always shine: some PMIs are negative, housing is looking for a direction and the Australian consumer seemed reluctant. The recent rise of 0.9% in retail sales during February is certainly a positive on this background.
- 9 As: Finance minister Swan bragged that Australia is in the exclusive club of countries which have 3 AAAs: a perfect credit rating from all three agencies. This also helps the Australian dollar.
- Lower chance of a rate cut: the RBA left the rates unchanged and the statement didn’t go in the direction of hinting about a rate cut. The central bank seems reluctant to cut the rate under the post-crisis low. With the recent positive figures, we could see a high later in the year.
All in all, the Australian dollar certainly has reasons to rise. For a break of the impregnable 1.06 level, another month of excellent job gains is probably needed.
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