News Column

Australian Dollar Extends Gain After China Data

August 13, 2014

CANBERA (Alliance News) - The Australian dollar continued its early gain against most major currencies ahead of European deals on Wednesday, as China's retail sales growth slowed more-than-forecast in July, raising hopes that Beijing will step up stimulus measures to support economic growth.

Data from the National Bureau of Statistics showed that China's retail sales growth slowed for the second straight month in July. Retail sales advanced 12.2% on a yearly basis in July, following June's 12.4% increase. The rate was also below expectations of 12.5%.

Industrial production in China grew 9% in July from last year. The annual growth rate was forecast to ease marginally to 9.1% from 9.2% in June.

China's fixed asset investment increased 17% from January to July compared to a 17.3% increase in the January to June period and the 17.4% rise forecast by economists, separate data showed.

Soft data raised hopes that Chinese monetary authorities may unveil more policy measures to attain the economic growth target.

The aussie got a boost in early deals after data showed that Australia's consumer confidence increased at a faster rate in August.

The results of a survey by Westpac and the Melbourne Institute showed that consumer sentiment index of Australia rose 3.8% month-on-month to 98.5 in August from 94.9, still remaining below the no-change mark of 100. In July, the index had risen 1.9%

The aussie strengthened to 6-day highs of 0.9298 against the greenback and 95.15 against the yen, off early lows of 0.9263 and 94.71, respectively. The next resistance level for the aussie is seen around 0.935 against the greenback and 96.00 against the yen.

The aussie came off from an early low of 1.4431 against the euro, rising to a 6-day high of 1.4367. If the aussie continues its rise, it may find resistance around the 1.43 region.

The aussie touched a session's high of 1.0150 against the loonie and held steady thereafter. This may be compared to an early low of 1.0119. Continuation of bullish trend may take the aussie to a resistance around the 1.02 level.

The aussie held steady against the NZ dollar, after rising to a 6-day high of 1.1023, from an early low of 1.0984. The aussie is poised to target resistance around the 1.11 mark.

Looking ahead, Swiss ZEW economic sentiment index for August and Eurozone industrial production for June are due shortly.

The US advance retail sales for July and business inventories for June are set for release in the New York session.

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Source: Alliance News

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