South Pacific Currencies UP on China GDP Data

By TraderVox.com

Tradervox.com (Dublin) – Prior to the Chinese GDP report was released, the south pacific dollars we set for a weekly drop; however, positive reports from China enhance demand for riskier assets pushing the New Zealand and Australian dollar up against most major currencies. China, Australia’s largest trading partner and New Zealand’s second largest, had a Gross Domestic Product growth of 7.6 percent as the market expected according to the National Bureau of statistics in Beijing. The strengthening of the south pacific dollars was also supported by Asian stocks rally after the announcement in China.

According to a currency strategist at Westpac Banking Corp in Singapore, Jonathan Cavenagh, the gross domestic product in China was within the market expectation hence providing support for the commodity related currencies. However, Cavenagh was pessimist about future growth saying that growth is limited hence we might still see some squeeze on the Australian dollar. The data from China showed that the economy increased by 7.6 percent in the second quarter as compared to the 8.1 percent expansion realized on the first quarter. Economists had predicted and expansion of 7.7 percent. The data increased the demand for Asian Stocks, raising the MSCI Asian Pacific Index by 0.5 percent after it had dropped by 0.2 percent earlier in the week.

The data from the National Bureau of Statistics came barely a week after the People’s Bank of China announced its interest cut as it acted to support growth in the country. The Chinese economy is experiencing downward pressure according to Chinese Premier Wen Jiabao who was said the country would intensify its action to shove off the current downward trend in the economy.

After the GDP data in China was released, the Australian dollar increased by 0.2 percent against the dollar to trade at $1.0163 after it had declined by 0.5 percent during trading in Sydney. The currency added 0.2 percent against the yen to exchange at 80.58 yen; it had weakened by 1.7 percent against the Japanese yen yesterday. The Kiwi was up by 0.3 percent against the US dollar to 79.16 US Cents after it had fallen by 0.8 percent.

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