Global Macro: Chinese Growth Stops Fall of Australian Dollar
NEW YORK (TheStreet) -- Chinese growth has helped put a bottom under the falling Australian dollar/Japanese yen currency pair.
On Monday it was reported that Chinese gross domestic product annual growth of 7.7% beat the forecast of 7.6%. The strong number out of China, a close trading partner with Australia, boosted sentiment for the Aussie dollar.
The Aussie dollar had come under pressure in recent weeks as the country reported a decrease of 22,600 jobs in December when a decrease of only 7,500 jobs was expected. Reserve Bank of Australia officials have stated that the domestic currency was overvalued, and the weak employment number reiterated that belief.
The Australian economy derives a majority of its export revenue from China. Weak Chinese manufacturing and services numbers earlier in the year brought the Aussie dollar lower.The strong Chinese growth number improves the outlook for Australia. If the Chinese economy can continue to grow at a 7% rate or better over the next year, then demand for Australian exports should remain high. That would be bullish for Australian interest rates and the Aussie dollar.
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