Australian Dollar: ANZ Research Warn that Despite Today's GDP Data, RBA Still on Course to Cut Interest Rates
- British Pound (£) to Australian Dollar (AU$)(GBPAUD): 1 GBP = 1.7064 AUD -0.01258 (-0.732%)
- Australian Dollar (AU$) ⇨ British Pound (£)(AUDGBP): 1 AUD = 0.5860 GBP +0.00429 (0.737%)
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Chinese PMI underpins AUD
Support for AUD came as the Chinese HSBC/Markit Services PMI showed faster expansion in August.
Shanghai’s Composite traded to 2,121.68, while Hang Seng index hit 22,438.40 before paring gains later in the session taking the Aussie higher.
Australian economic growth provides renewed relief for AUD
The big news for the Australian currency on Wednesday concerns the latest Aussie GDP release.
Australia printed 2.6% year-on-year growth in the second quarter, outpacing the estimations of 2.4%.
Australian growth still below trend warn ANZ
Justin Fabo at ANZ Research says he is still wary of the trend in Australian economic performance and believes the RBA will likely cut rates further:
"Our view that growth in the Australian economy was below trend heading into the second half of 2013, and remains so, is unchanged following today’s figures.
"Gross national expenditure improved 0.6% q/q in Q2 but remained below its level in Q3 2012. Household consumption rose modestly in the quarter, close to our expectation, but growth over the year was weak as wages income slowed sharply.
"Taking a longer term perspective, average growth since the GFC has been noticeably below average
"While overall GDP growth printed close to our expectation, the major surprise to us was much weaker-than-expected business investment in Q2. In particular, new engineering construction declined modestly against our expectation for strong growth.
"This fall is difficult to reconcile with strong growth in this component in the private CAPEX release and an apparent very sharp rise in capital goods imports related to LNG investment in the quarter.
"Today’s numbers and more up to date information are consistent with the RBA’s view that the economy is growing at below-trend rates.
"The Governor’s statement yesterday and recent communications from the Bank, in our view, suggest that the Bank is ‘on hold’ for the time being with a bias to ease, and a hope that the AUD will fall further."