The value of the Australian dollar has again taken its place in indicating a better national economy in the fourth quarter of 2015.
The latest report released on Wednesday has revealed that the 12th largest economy of the world has witnessed an expected rise of 0.6 percent in December, prompting the annual economic rise to three percent. JP Morgan economist Ben Jarman said that the rise in the economy of the nation has made the rate cut unlikely in the near future. “On the trajectory of the numbers we saw today that shouldn’t be necessary in the near-term, so the Aussie has obviously rallied on the back of that,” Jarman told AAP.
He added that he doesn’t think the local currency should supplement the positive results received on Wednesday just overnight as the US non-farm payrolls report is about to release on Friday (US time). “It’s just too risky for markets to carry on with conviction with a high beta currency like the Aussie dollar in the lead up to this release,” Jarman said as quoted by Yahoo News.
“We expect it to hold its recent gains until then, but a strong (US payrolls) report would be a moderating force on the dollar,” he added.
Although the quarter four result relating to GDP is lower than that of the third quarter that recorded a 0.9 percent, it was still better than the estimated value of 0.4 percent gain. The dollar jumped to 0.7 percent, making the value reach US$0.7234 cents.
The GDP figures have strengthened the decision of the Reserve Bank of Australia (RBA) to let the interest rate be a record low of two percent. It also indicated that the latest records of the Australian economy was better and stronger than the other commodity-based nations, including Canada.
“Our concerns are two-fold. First up, the real GDP data probably flatters the momentum in the economy. When you look at falling commodity prices and weak income growth, you get a softer picture,” Nomura Australia’s executive director and rate strategist Andrew Ticehurst told CNBC.