Because China’s economy has expanded over the last year, the Australian Dollar rose in value. It climbed versus the US dollar on Monday, extending a two-day winning streak. Steady Chinese interest rates further bolster the Aussie’s standing against the greenback.
China’s central bank kept key interest rates steady—3% for one year, 3.5% for five. Because Australia often trades with China, shifts in the Chinese economy frequently impact the Australian dollar.
China’s Economy Shows Positive Results
The third quarter of this year saw a 4.88% increase in China’s economic output. After that, growth accelerated to 1.51% over the final three months, surpassing projections. At the same time, steel producers increased their output, which went from 5.2% in September to 6.5%.
Despite dipping alongside gold values and smaller company shares, the S&P/ASX 200 stayed around 9000. A lift in Australian stock prices seems likely, buoyed by the cooling of tension between America and China.
The AUD is Feeling the Heat
Given the likelihood of a rate cut by the Reserve Bank of Australia (RBA), the Australian dollar is suffering. It is happening because unemployment hit a 4-year high of 4.5% last month. The third-longest shutdown has caused the US dollar to weaken for almost three weeks at the same time. Powell and the Fed expect more interest rate cuts as prices rise and employment stabilizes. In the meantime, the Australian dollar is currently trending lower at 0.6510 compared to the US dollar, hitting 0.6547 after finding a floor at 0.6430.
