Dollar brushes off RBA concerns
The currency was trading at US91.40¢ late in the session, up from US90.88¢ on Thursday.
Easy Forex currency dealer Milica Nikolic said the dollar dipped after the release of the Reserve Bank's quarterly statement on monetary policy, which downwardly revised its forecasts for growth in the economy this year.
"The RBA reduced the growth forecasts for the economy so the Aussie pulled down but then immediately bounced back up," Ms Nikolic said. "It looks like we've run out of sellers."
The local currency was also given a boost following positive retail, manufacturing and mining data from China. Industrial production growth accelerated last month to a five-month high of 9.7 per cent year-on-year, the Chinese government said.
Industrial production, which measures output at factories, workshops and mines and is a key indicator for the world's second-largest economy, also rose 9.4 per cent over the first seven months of this year.
Meanwhile, bond futures prices were lower after Chinese inflation held steady at 2.7 per cent, potentially leaving room for the government to stimulate the economy.
Nomura head of macro products, Jon Linton, said bond prices were pushed lower after the inflation data fell in line with expectations.
He said the RBA's quarterly statement on monetary policy had been interpreted in different ways, with some saying it maintained an easing bias while others interpreted it as hawkish.
"By and large, it was pretty much as expected, but maybe the market had been looking for a few clearer hints from the RBA about monetary policy," Mr Linton said. "Our market is going to be dragged around by what goes on overseas for the next couple of weeks."
The September 10-year bond futures contract was trading at 96.280 (implying a yield of 3.720 per cent), down from 96.320 (3.680 per cent) on Thursday. The three-year contract was at 97.420 (2.580 per cent), down from 97.460 (2.540 per cent).
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The Australian dollar initially dipped after the Reserve Bank's quarterly statement cut growth forecasts, but it then bounced back. Traders say selling pressure eased and the currency was supported by positive Chinese retail, manufacturing and mining data, which helped lift the Aussie despite the weaker RBA outlook.
The article reported the Australian dollar trading at US91.40¢ late in the session, up from US90.88¢ on the previous day.
Market reaction was mixed: some read the RBA's statement as maintaining an easing bias while others saw it as more hawkish. Overall commentators said the statement was largely as expected but lacked clearer hints about future policy, leaving markets to parse different signals.
Stronger Chinese data — including retail, manufacturing and mining indicators and industrial production rising 9.7% year‑on‑year for the month (and 9.4% over the first seven months) — gave the Australian dollar a boost. Positive Chinese activity often supports commodity‑linked currencies like the AUD.
China's inflation held steady at 2.7%, which market commentators said could leave room for further government stimulus. That inflation print being in line with expectations pushed bond futures prices lower, as traders adjusted expectations for policy and yields.
The September 10‑year bond futures contract traded at 96.280 (implying a yield of 3.720%), down from 96.320 (3.680%). The three‑year contract was at 97.420 (2.580%), down from 97.460 (2.540%). In other words, futures prices fell modestly and implied yields edged higher.
The article highlights that overseas developments are likely to influence Australian markets in the near term. Commentators noted markets will be 'dragged around' by what happens overseas, so investors should stay aware of major global releases and policy signals — especially from China and other large economies.
Key takeaways: the Aussie can rise even when domestic central bank forecasts soften if external data (notably from China) turns positive; bond futures and yields can move on inflation and policy expectations; and mixed interpretations of RBA guidance mean global events and data will remain important drivers for currency and bond markets.
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