Australian dollar boosts due to latest China data

12:11, October 02, 2010      

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The Australian dollar climbed on Friday, after better than expected Chinese manufacturing data countered concerns about the global outlook, and augured well for demand for Australia's resource exports.

By 5.15 p.m. local time, the currency was trading at 96.89 U.S. cents, having reached 97.32 U.S. cents the night before, its highest exchange mark since July 2008.

The Australian currency was well supported by surprisingly strong data from China, indicating a rise in the official purchasing managers' index to 53.8 in September from 51.7 in August.

The data has made August the 19th straight month that the official purchasing managers indexes (PMI) has stood above the threshold of 50 that demarcates expansion from contraction. And it has suggested that China will need to keep importing Australia's resource products to support manufacturing.

Ray Attrill, head of research at financial research firm 4Cast, said China's figures would add to expectations the Reserve Bank of Australia (RBA) will increase the cash rate when it meets on Tuesday.

"If there's a single piece of news that impacts on the RBA's thinking of the external environment and how that impacts on Australia, it's this," Attrill told Australia Associated Press ( AAP) on Friday.

"And in a way, the Australian is reacting to the increased likelihood of the RBA pulling the trigger next week."

The good data from China came shortly after an Australian survey found activity in the manufacturing sector had contracted in September.

According to Attrill, the RBA will be putting more weight on the Chinese figures as they prepare for their meeting next week.

"Those data (Australian PMI) are relatively minor in the scheme of things when the RBA is taking a very much forward looking view of how much confidence it has in its 2011 growth outlook."

He said the currency was likely to reach its overnight high of 97.32 during Friday's local session.

Source: Xinhua

(Editor:王寒露)

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