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FOREX-Encouraging China economic data buoys Australian dollar

Published 15/07/2019, 04:04 pm
© Reuters.  FOREX-Encouraging China economic data buoys Australian dollar
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* Australian dollar rises 0.2% after Chinese Q2, June data

* Chinese retail sales, output beats expectations

* Chinese quarterly GDP growth was slowest since 1992

* Yen, Swiss franc ease after data release

By Tom Westbrook

SYDNEY, July 15 (Reuters) - The Australian dollar reached a 10-day high on Monday on stronger-than-expected economic data from China, which some analysts saw as signalling that moves to revive spending in the world's second biggest economy are working.

The Aussie AUD= gained 0.2% to $0.7033 against the U.S. dollar USD= , which ticked higher against the safe-haven yen JPY= and the Swiss franc CHF= .

China's industrial output bounced in June from a 17-year low in the previous month. June retail sales surged 9.8% from a year earlier, compared with the 8.3% - a slowing from May's tepid figures - that polled analysts expected. is Australia's biggest export market and the data caused the Australian dollar to touch its highest point since July 4.

The yuan CNY= strengthened against the dollar to get to its highest since last week, while the New Zealand dollar NZD= hit a two-week peak. economy is finding a base and it was not as weak as feared, so risky currencies go up," said Imre Speizer head of NZ strategy at Westpac Banking Corporation WBC.AX in Auckland.

"The market is wanting to price a lot of risk into the Aussie," he said.

China's quarterly gross domestic product posted its slowest pace of growth in 27 years, as expected, growing by 6.2% in the June quarter compared to a year earlier. upside from an Australian perspective is that China - our biggest trading partner - will continue to stimulate its economy to achieve its official annual growth target," said Commonwealth Bank of Australia economist Ryan Felsman.

"The new stimulus measures appear to be working, contributing to stronger readings in June activity data, with investment, production and retail spending all beating market expectations," he wrote in a note to clients.

The U.S. dollar remained under pressure on expectations of a Federal Reserve rate cut. Comments last week from Fed Chair Jerome Powell and Chicago Fed president Charles Evans indicated U.S. rate cuts are needed to boost inflation.

In the U.S., a 25 basis-point rate cut at the end of July is priced in, and there is a roughly 20% chance of a 50 basis point cut. FEDWATCH

Investors will be looking to U.S. retail sales figures due Tuesday and company earnings for signs of how shoppers and businesses are weathering the slowdown.

Against a basket of currencies .DXY the dollar held near a 10-day low at 96.830.

It gained against the yen to 108.10, before that was pared to 108.00, well underneath resistance at 108.98. Monday is a national holiday in Japan and dollar-yen trading volumes were thin.

The greenback rose as much 0.1% against the Swiss franc before easing back to $0.9845. The euro EUR= slipped to $1.272 though stayed in the two-cent range that has held the single currency since June.

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