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Aussie rebounds from nearly 4-year low as US dollar drops

H.S. Borji
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Aussie rebounds from nearly 4-year low as US dollar drops

The Australian dollar rallied against its US counterpart Monday, as the greenback declined following bearish comments from Federal Reserve officials, while China posted an unexpected gain in imports.

The AUDUSD climbed to an intraday high of 0.8787. The pair would subsequently consolidate at 0.8751, advancing 0.8 percent. The pair is likely supported at 0.8648. On the upside, the pair is likely to face resistance at 0.8756.

The US dollar was under pressure following comments from Federal Reserve Vice Chairman Stanley Fischer, who said on Saturday weak global growth could delay the timing of an interest rate hike.

“If foreign growth is weaker than anticipated, the consequences for the US economy could lead the Fed to remove accommodation more slowly than otherwise,” Fischer said on Saturday.

The global economy is forecast to grow just 3.3 percent this year and 3.8 percent in 2015, according to revised estimates from the International Monetary Fund.

“The weaker than expected growth outlook for 2014 reflects setbacks to economic activity in the advanced economies during the first half of 2014, and a less optimistic outlook for several emerging market economies,” the IMF said October 7.

In economic data, China posted a weaker trade surplus in September, as imports rose unexpectedly.

The world’s second-largest economy posted a trade surplus of $31 billion in September, down from $49.83 billion the month before. Exports surged 15.3 percent, exceeding forecasts and well above the 9.4 percent growth pace recorded in August. Imports advanced 7 percent in September following a 2.4 percent drop the prior month.

Australia had no economic data to report early in the day. At 22:30 GMT RBA Assistant Governor Guy Debelle will speak at Citi’s Sixth Annual Australian and New Zealand Investment Conference. The two-day event brings together top companies, leading macroeconomic analysts and politicians to discuss economic issues facing Australia and New Zealand.

On Tuesday the National Australia Bank will release its closely followed business confidence survey, which measures current business conditions in Australia. Business confidence remained resilient in August, supported by strong forward orders and stable consumer confidence, NAB reported last month. However, a shaky global economy is expected to result in another year of below-trend growth.

Australia’s economy will grow 2.8 percent this year and 2.9 percent next year, the IMF said last week. While a pick-up in exports is expected offset broad declines in natural resource investment, economic growth will remain below the long-term average of around 3.25 percent.

The international institution representing 188 countries also sees Australia having the second-worst unemployment rate in the Asia-Pacific region over the next two years at 6.2 percent and 6.1 percent, respectively. Only the Philippines is expected to be higher at 6.9 percent and 6.8 percent, respectively.

The Australian Bureau of Statistics revised the country’s labour force numbers in July and August after reporting wild fluctuations. Government economists later said unemployment was virtually unchanged in those two months.

The unemployment rate edged up to 6.1 percent in September, as the economy shed nearly 30,000 jobs, official data showed last week.

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