Australian Economy Continues to Recover, Expectation of Interest Rates Hike Mount
February 26th, 2010 Posted in Aussie - Kiwi
The Australian Dollar rebounded slightly in today’s early trading after better than expected results for Private Sector Credit were published. This is a measure of the change in the total value of new credit issued to consumers and businesses. The result indicates that public and business spending grows as the Australian economy continues to recover from the global recession.
The latest result adds to the expectations that the central bank will resume raising interest rates in its upcoming March 2nd meeting as the economic data coming out of Australia recently justifies higher rates. This expectation helps push the AUD up against the USD and JPY. The benchmark interest rate is 3.75% in Australia compared with as low as zero in the U.S. and 0.1% in Japan; this makes the South Pacific nation’s assets attractive to investors, bolstering the currency.
The Aussie received further boost by a rebound in Asian equities today as Japan’s factory output expanded for an 11th straight month in January and Retail Sales in the world’s second-largest economy jumped 2.6% from a year earlier. Australia’s currency rose to 89.18 U.S. cents and advanced to 79.49 yen.
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