China trade boost gives Aussie a lift
The dollar hit its highest level in weeks as official figures showed Australia had benefited from a surge in shipments of commodities to our biggest trading partner in the final month of 2012.
With iron ore prices also taking off this week, analysts said China's revival suggested the Reserve Bank would leave the cash rate on hold at 3 per cent next month.
In a positive sign for the world's second largest economy, the figures showed a 14.1 per cent jump in exports in the year to December, up from just 2.9 per cent in November, exceeding most analysts' forecasts.
Chinese imports were up 6.1 per cent in the year - including a 7 per cent jump in imports from Australia - suggesting solid domestic demand.
The global co-head of currency strategy at NAB, Ray Attrill, said investors had piled into the Aussie dollar after the strong trade figures.
"It's taken off like a rocket," he said. "The China trade numbers have punched the lights out in relation to what economists' expectations were in all respects."
Significantly for Australia, China's iron ore imports were up 10.7 per cent in the year to December. "It seems to suggest that the Chinese growth engine has revved up towards the end of last year," Mr Attrill said.
While the trade numbers are the latest sign of stronger activity in China, the news on Australia's construction industry was less positive.
The number of building approvals granted for private-sector houses - which points to future activity in construction - fell 0.3 per cent in November, the Bureau of Statistics said.
Frequently Asked Questions about this Article…
The article says the Australian dollar rose more than half a cent to US105.45¢ after a surge in China's trade raised hopes that China’s economy was recovering faster than expected. Strong shipments of commodities to China drove investor demand for the Aussie.
China’s trade data showed a 14.1% jump in exports year‑on‑year to December and a 6.1% rise in imports, including a 7% increase in imports from Australia. The report also noted China’s iron ore imports were up 10.7% in the year to December, boosting demand for Australian commodities.
Ray Attrill, NAB’s global co‑head of currency strategy, said investors piled into the Aussie after the strong trade figures and described the move as ‘taken off like a rocket,’ noting the data exceeded economists’ expectations.
Analysts quoted in the article said the stronger China trade data and rising iron ore prices suggested the Reserve Bank was likely to leave the cash rate on hold at 3% next month, though that was presented as a market expectation rather than a certainty.
According to the article, the Aussie’s lift came from investor inflows after positive China trade data. Everyday investors should be aware that currency moves often reflect changing economic signals—such as stronger commodity demand from China—which can influence investment returns and currency exposure.
The article notes a less positive sign for Australia’s construction sector: building approvals for private‑sector houses fell 0.3% in November, which can point to weaker future activity in construction.
Yes. The article reports exports rose 14.1% in the year to December—up from 2.9% in November—and that the figures exceeded most analysts’ forecasts, contributing to stronger market sentiment.
The key things to watch are upcoming Chinese trade data and iron ore price trends, investor flows into the Australian dollar, and Australian domestic indicators such as building approvals and any Reserve Bank commentary or cash rate decisions.
Call 1300 880 160
Start a chat
Schedule a call
