By TraderVox.com
Tradervox.com (Dublin) – The Australian dollar advanced after improvements were reported in the Retail Sales and Trade Balance data released today. The data has boosted speculations that the Reserve Bank of Australian will hold its borrowing cost when it meets next week. On the other hand, the New Zealand dollar increased after data showed that whole-milk powder prices increased for the first time in one and a half months. However, South Pacific dollars’ gains were limited as speculation of inadequate measures by the European Central Bank rose in the market.
According to Gavin Stacey, who is the Chief Rate Strategist in Sydney at Barclays Plc, the data released today may help the Aussie to rise higher today. She also cast a shadow on the ability of the ECB to act according to the market’s expectation, hence indicating that this is a limiting factor on the Aussie advance. The National Bureau of Statistics said in a report today that the Australian Retail Sales increased by one percent in June after it recorded a revised 0.8 percent rise in May. Further, positive news came as Trade Surplus of A$9million was recorded in the same period against an market estimate of a decline of A$375 million.
The market expects the RBA to retain its current interest rates at 3.5 percent when official meets on August 7, while the ECB officials are expected to keep rates at 0.75 percent in their meeting today. Economists have warned that if the ECB does not live up to the promises made by ECB President Mario Draghi, there will be a big fall in risk appetite which will affect the south pacific currencies as well as other commodity related currencies.
The Australian dollar increased by 0.2 percent against the US dollar to trade at $1.0478 at the close of day in Sydney. The Aussie dropped 0.4 percent yesterday the biggest drop since July 23. It was up 0.2 percent against the yen to trade at 82.19 yen. The New Zealand dollar was up by 0.2 percent against the dollar to exchange at 80.88 US cents and rose by the same margin against the yen, trading at 63.44 yen.
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