The AUD/USD sways with the latest economic indicators aside from the dictates of monetary policies in the U.S. and China's economic growth.
Australia: Overnight trade saw the AUD reach its highest level since 19 August 2013. In currencies, better sentiment in markets overnight saw the relative 'safe-haven' of the USD and JPY shunned in favour of the NZD, AUD, GBP, and CAD.
Official data yesterday showed Australia's gross domestic product (GDP) was up 0.6% in the June quarter for an annual rate of 2.6%, which matched market expectations and seemed to support the RBA moving closer towards a neutral stance.
Note though the headline outcome was flattering. Business investment and dwelling construction fell in Q2, while consumption was weak at 0.4%. Growth remains below trend and the RBA is unlikely to dispense with their easing bias soon.
On Tuesday, the RBA kept the cash rate at 2.5% but its statement gave no guidance on future rate movements. Local growth
figures and recent bout of positive economic data from China "may" push the AUD higher in the next 24 hours.
This is despite the main street view the currency is still too high for the rebalancing of the economy. Today, the Australian Bureau of Statistics will release international trade figures for July.
Majors: US equity markets had another positive session overnight, with the Dow up 0.7% and the S&P 500 up 0.8%, while European markets saw an average increase of 0.2%. Global risk aversion eased overnight, as buoyant August service sector data reinforced the notion that global growth is picking up.
The Fed's Beige Book further supported the growth outlook, reporting that economic activity continued to expand at a 'modest to moderate pace' in July/August, with better manufacturing activity and rising consumer spending on household goods and cars.
Equity markets came off their highs slightly towards the end of the session, after the US Senate Foreign Relations Committee voted to authorize a limited military operation in Syria. Gold and oil edged higher after the news, but are still lower on the day. All eyes now on tonight's ADP employment and tomorrow's payrolls.
5 SEPT AU Trade Balance
EC ECB Announces Interest Rates
US ADP Employment Change
UK BoE Bank Rate / Asset Purchase Program
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