Australian dollar extends gains after solid GDP data

THE Australian dollar is almost half a US cent higher as the chances of another interest rate cut by the central bank fades following solid GDP figures.

Australian one dollar coins

THE Australian dollar is almost half a US cent higher as the chances of another interest rate cut by the central bank fades following solid gross domestic product (GDP) figures.

At 0700 AEST on Thursday, the local dollar was trading at 93.46 US cents, up from 93.04 cents on Wednesday.

In the early hours of Thursday, it peaked at 93.52 US cents, it highest level since Monday.

BK Asset Management managing director Kathy Lien said the Australian dollar was the best performing currency overnight. “Stronger than expected second quarter GDP growth and an uptick in service sector activity in Australia and China helped the Australian dollar erase all of Tuesday’s losses,” she said.

“The upside surprises in both reports ensures that the Reserve Bank of Australia will leave interest rates unchanged for the rest of the year.” The Australian economy grew 0.5 per cent in the June quarter, which slightly ahead of expectations of a 0.4 per cent rise. GDP growth in the 12 months to June was 3.1 per cent, seasonally adjusted.

On Thursday morning markets will be focused on the release of July trade balance and retail spending figures from the Australian Bureau of Statistics.

Originally published as Australian dollar extends gains after solid GDP data