- Paul Bloxham, chief Australia economist at HSBC Holdings Plc
After a release of a better-than-expected GDP data from Australia, the Aussie soared 0.5% to 0.8995 against the U.S. Dollar, approaching an important resistance at 0.9000. However, later the currency was unable to maintain its earlier gains, as a heavy selloff pushed the AUD/USD pair back to 0.8934.
Despite Aussie's inability to climb higher, the economy has sent a welcoming sign, as growth accelerated back into respectable territory in the final quarter, thanks to a soaring export earning and stronger household spending. According to the Australian Bureau of Statistics, the resource– rich economy posted a 0.8% in the fourth quarter, a little faster than the 0.7% expected by analysts and up from 0.6% a quarter earlier. This makes the growth for the full 2013 at 2.8%, prolonging a 22-year long period of economic growth. The main upside pressure came from domestic consumption that advanced 0.7% on the quarter and 2.6% on a yearly basis. At the same time, investment levels plunged 1.2% over the final quarter.
While Australian policymakers are now trying to diversify growth in the domestic economy to help boost job opportunities not only in the mining sector, the latest GDP report puts another rate cut off the table. Moreover, the evidence is starting to build that rate can be even revised higher by the end of this year.
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