Even as market participants take in a wait-and-see approach to risk sentiment, the US dollar is perceived to move lower against the Australian currency today. Investors eye the results of the central bank meetings across the Atlantic today, while awaiting corporate earnings reports. But with Australia and China registering favorable economic data earlier today, the Aussie is likely to benefit in the currency market.
In a morning note earlier, Ishaq Siddiqi, market strategist at ETX Capital said that neither the Bank of England nor the European Central Bank is expected to change its monetary policy. “Instead central bankers are likely to wait for more economic data to see how the economic activity is faring in 2013 before making any decisions.”
Earlier today, the Australian Bureau of Statistics reported that home-building approvals in the Land Down Under advanced in November, for a third time in the past four months. The Reserve Bank of Australia lowered borrowing costs five times from November 2011 to October to buttress the economy as a resource investment boom is predicted to peak this year, which in turn encouraged plans for apartment projects. The number of permits granted to build or renovate houses and apartments gained 2.9 percent from October, when they fell a revised 5.1 percent, according to the report.
Further, the Chinese report released earlier showed that imports rose to a record in the nation’s biggest overseas market. China’s exports rose 14.1 percent in December from a year earlier while imports increased 6 percent, leaving a trade surplus of $31.6 Billion, according to the Customs General Administration of China.
“The Chinese data is a whole lot better than anyone expected with both imports and exports accelerating,” said Mike Jones, a currency strategist at Bank of New Zealand in Wellington. “That will only add to recent investor optimism that the Chinese rebound has got legs and should take the Aussie dollar higher.”
Considering these fundamental data, a long position is recommended for the AUDUSD. Be on the lookout still for probable technical corrections as the price index already indicates that the currency pair is already overbought.
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