The Australian dollar has hit an almost five-month high, helped by some stronger Chinese economic growth figures for the September quarter.
Early Monday the local unit was trading at 96.71 US cents, up from 96.27 cents on Friday.
Early on Monday morning, the Australian dollar peaked at 96.82 US cents, its highest level since June 4.
On Friday, it was reported that the Chinese economy expanded by 7.8 per cent year-on-year in July-September, exceeding the government’s target of 7.5 per cent.
BK Asset Management New York managing director Boris Schlossberg said it was a robust figure at a time of sluggish global economic growth.
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“Many analysts have noted that investment continues to comprise more than 50 per cent of Chinese gross domestic product (GDP) and that the latest figures simply showed the same old government stimulus forces at work,” he said.
“The Aussie dollar initially sold off slightly on the Chinese numbers, but eventually recovered to trade back to day’s highs as currency traders saw few red flags in the data.”
Schlossberg said the Australian dollar is also strengthening because of increasing expectations that the Reserve Bank of Australia is coming to the end of its interest rate cutting cycle.
“RBA governor Glenn Stevens said that he `personally’ thought that a lower Australian dollar would be helpful to rebalance the economy,” Schlossberg said.
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“The emphasis on personal rather official policy indicates that, at least for now, the RBA is willing to tolerate the pair above the 95.00 US cents.”
Australian stocks have jumped to fresh five-year highs in response to gains on global stock markets on Friday night.
In early trade Monday the local market climbed more than half a per cent to its highest level since mid 2008.
“It looks like a good firm opening and that just follows on from the US on Friday night,” CMC chief market analyst Ric Spooner said.
US and European markets finished last week on a positive note as the end of the US government shutdown continued to buoy investor sentiment.
Mr Spooner said the local market was now at an “inflection point” which could see it either gain steadily over the coming weeks or drop back as investors collect profits.
“It will be interesting to see which way the market plays it over the coming days,” he said.
The gains were widespread across the market on Monday, with all major sectors recording rises.
