"The Australian dollar, while below its level earlier in the year, is still uncomfortably high. A lower level of the exchange rate is likely to be needed to achieve balanced growth in the economy"
- Glenn Stevens, RBA Governor
The Australian Dollar was seen trading around a three-and-a-half year low last week on the back of disappointing employment data, that showed economy's inability to create working places. This week, however, the Oz currency started with some gains, moving back to 0.8803 against the greenback, after Chinese economic data surprised markets on the upside. The world's second largest economy expanded 7.7% in the final quarter of 2013, coming slightly higher than the 7.6% growth predicted by analysts, however, slowing further from Q3 reading of 7.8%. Nonetheless, this is a welcoming sign, as industrial production, which is seen as a strong indicator of future economic performance, rocketed 9.7% from a year earlier.
Australia managed to avoid slipping into recession during the global crisis mostly due to an exorbitant demand from China's rapidly expanding economy, and the latest report is suggesting the demand from China may pick-up soon, providing additional boost to the resource-rich economy.
Meanwhile, Oz economy is showing some signs of recovery, as inflation climbed the most in four years last month, and is poised to advance further, according to the Melbourne Institute. The TD Securities monthly measure of inflation rose to 0.7% in December, diminishing concerns of another rate cut from the RBA.
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