Australian dollar forecasted to gain as Jyske Bank issue a BUY recommendation on AUD-USD; parity vs US dollar forecast
A look at the latest spot exchange rates shows:
The pound sterling to Australian dollar exchange rate is 0.3 pct lower at 1.5836.
The euro / Australian dollar exchange rate is 0.5 pct in the red at 1.3511.
The Australian dollar / US dollar exchange rate is 0.75 pct higher at 0.9643.
Please Note: The above quotes are taken from the spot markets; your bank will however affix its own discretionary spread to these figures. However, an independent FX provider will guarantee to beat your bank's offer, thus delivering you more currency. Please find out more here.
Chinese data boosts Australian dollar
Driving the Australian dollar higher today was news that PMI for industry rose to 50.8, while a decline to 50 had been expected.
Owing to the Australian economy's relationship with China it is easy to see why Chinese data is so important.
The positive release has prompted analysts at Jyske Bank to call a Buy on the Australian dollar after forecasting a return to parity:
"Following the release of fairly positive economic indicators in China overnight, we recommend investors to make some purchases of commodity currencies (short-term recommendation); we prefer AUD to NZD and CAD. A glance at the technical indicators reveals that both stochastich and MACD have given short-term buy signals.
"We expect that AUD offers potential up to par value at 100."
Retail sales moderate
On the economic front investors digested today's retail sales data release.
It was shown that retail sales continued to moderate in april after strong growth at the start of the year.
The value of Australian retail sales rose modestly in April, up 0.2% m/m which was in line with expectations (0.3%).
After strong growth in January and February – some of which we suspect reflects a degree of ‘pent up’ demand after weak growth towards the end of last year – growth in retail sales has continued to moderate.
Ahead: RBA interest rate decision
The next major event for the Australian dollar is the Reserve Bank of Australia interest rate meeting.
ANZ Research say the RBA will leave rates unchanged at 2.75 pct at its meeting tomorrow.
"Nevertheless, we continue to expect the cash rate to be reduced by a further 25bps later in the year as the RBA decides further assistance is needed to guide the economy toward other areas of growth other than from the mining sector," say Savita Singh at ANZ.