The Aussie dollar was in the spotlight today after the Australian economy grew at a faster pace than economists had forecast.
The island continent reported GDP growth of 1.2% in the last quarter, the fastest growth in three years, which was better than the 0.9% expansion economists had predicted. The strengthening economy sparked a revival in local equity markets which helped AUD/USD gain 1.5% to $0.9050. Further adding a spring in the Aussie dollar's step was reports from China that manufacturing expanded by more than expected in August. The Purchasing Managers Index, a gauge for manufacturing activity, rose to 51.7 in August from 51.2 the prior month. The median forecast from economists surveyed by Bloomberg pointed to an increase to 51.5. Today’s report from China helped to alleviate fears that the Chinese economy may be cooling too fast, which boosted the Aussie dollar as China is one of the main consumers of Australia’s resources. The Aussie dollar could see further volatile movements this week as the political stalemate in Australia is yet to be resolved. Meanwhile in the US , the string of employment data due this week, starting with the ADP employment change this afternoon, could either spur risk appetite or destroy it depending on the numbers received.
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