Australian dollar seems to be having a rollercoaster ride. It was trading at 87.79 US cents on last Friday. When market opened on Monday, dollar was down 0.88 US cents.
It was last week when the currency was on a downward spiral. It was the effect of lower than expected growth prediction for Germany, the largest economy of Europe.
Forex Capital Market analyst David de Ferranti regarded nervousness of investors, followed by increased risk aversion in the wake of market’s stumbling on Friday and increased volatility as the key reasons behind the slump of Australian dollar.
He also pointed at the not-so-good employment data and standing decisions by the Reserve Bank as some additional reasons that Australian dollar couldn’t find a direction. In his own words “Local economic prints continue to play second fiddle to other guiding factors including the ‘risk-off’ theme that has gained traction in recent weeks.”
After the market opened, Australian dollar performed moderately. There were promising numbers that came from China. China is the the biggest market for Australia’s dominant metal industry. China’s import had an increase of 7% in the month of September.
Aussie dollar is currently being traded at $0.87. It is the best performance compared to last week. Aussie dollar is up 0.8 per cent on the day. It is also 1.3 per cent higher than last week’s low. The low was the result of concerns regarding eurozone’s economic crisis.
Analysts expect the upbeat import figures from China to buoy Aussie dollar. An analyst at ING called Tim Condon said “the acceleration in [China’s] export growth will, we expect, allay some of the recent fear that the global economy is in a downward spiral.”
Official figures indicate Australia is currently having a trade surplus of $US 31 billion. The data is from the month of September and it was due to an astonishing lift in export import. Previous estimates on year-on-year exports were up 12%. But it was really up more than 15%.
The currency’s future therefore is not bleak at this moment, rather better than last week. There’s also an increase in demand for Australian bonds translating to the recovery of the currency.