An improvement in recently released trade data from China helped to boost the Australian Dollar to a 1-month peak against its U.S. counterpart. China is Australia’s largest export market and the news that trade performance handily beat the consensus forecast last month, with import growth striking a 6-month peak, flew in the face of other recent data which suggested that China’s economy was slowing down. The Aussie Dollar also recently got a lift on the news that the Reserve Bank of Australia’s monetary position is being reconsidered.
As reported at 12:22 p.m. (JST) in Tokyo, the AUD/USD traded at $0.9052, a gain of 0.2% and edging off a 1-month high at $0.9063. Currency strategists believe the Aussie will likely be range bound between $0.88 and $0.92 in the short term but that FX players will exercise caution given the RBA’s propensity to step in with rhetoric if the currency appreciates to an undesirable level; last December, the RBA governor reiterated that a price much above $0.90 was considered undesirable in the long term.
Yellen Testimony Unsurprising
At the same time, the U.S. Dollar Index was steady and held close to a 2-week trough following testimony by Janet Yellen, the new Federal Reserve Bank head, in front of the U.S. Congress. While investors were anxious to learn if Yellen would diverge from her predecessor’s generally predictable patter, it is apparent that the core policy message is relatively unchanged from Bernanke’s days as the Fed head and that additional unwinding of QE is likely in the months ahead. The U.S. Dollar Index was steady versus its major peers, trading at 80.650 .DXY.