The Australian dollar is back above 94 US cents, getting a boost from improved Chinese industrial profits.
At 0700 AEST on Tuesday, the local unit was trading at 94.07 US cents, up from 93.89 cents on Monday.
Chinese industrial profits grew by 17.9 per cent in the year to June, and up 11.4 per cent in the six months to June.
BK Asset Management MD Kathy Lien said the figures confirm that the Chinese economy is recovering from its slump earlier in the year.
“Stronger profitability bodes well for countries like Australia,” she said.
“The prospect of a stronger Chinese manufacturing PMI (purchasing managers’ index) should keep the Australian dollar bid this week.”
The main economic event this week will be the outcome of the US Federal Reserve policy meeting which ends early on Thursday morning, Australian time.
Lien said the Fed is widely expected to taper its bond purchases by another $US10 billion a month.
“The only tweak the Fed could make is to their description of unemployment,” she said.
“Since the June meeting, the unemployment rate declined from 6.3 per cent to 6.1 per cent, challenging the Fed’s view that unemployment continues to be high.”
AAP
