The Aussie has stabilised after five weeks of losses after Beijing announced a series of small measures to boost the stuttering recovery.
The Australian dollar moved higher on Monday, rebounding from nine-month lows as China announced a series of small stimulus measures to boost it ailing economy.
“These steps are all positive for risk assets, like the Australian dollar, equities, copper, and iron-ore prices, which all ended higher last week,” said Prashant Newnaha, a senior macro strategist at TD Securities. “The real question is can the market hang on to these gains.” Elsewhere, the much-anticipated speech by the US Federal Reserve chairman Jerome Powell at Jackson Hole failed to give investors much clarity on the next interest rate move for the world’s largest economy. He also stuck to his “high rates for longer” rate message.
Addressing the central banking symposium, Mr Powell said the Fed could raise rates again if the data supported that view. But he noted that with inflation moving lower, the central bank had the option of holding policy at its current level for an extended period.Fed fund futures ascribe a 63 per cent chance of a US rate rise this year, while in Australia, interbank futures imply just a 3 per cent chance that Reserve Bank will lift the cash rate next week to 4.35 per cent.
A better-than-expected global economy has also led investors to push back the timing of the start of rate cuts. Australian retail sales bounced 0.5 per cent in July, after a surprise fall the previous month. While the data beat forecasts for a 0.3 per cent gain, it’s unlikely to affect monetary policy.
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