The Australian dollar is recovering after weak economic data and suggestions that interest rates would remain low for some time weighed the currency down.
At 0700 AEDT on Friday, the local currency was trading at 92.29 US cents, up from 92.14 cents on Thursday.
Retail spending rose 0.2 per cent in February, much weaker than in the previous few months, which weighed the Australian dollar down, official data showed on Thursday.
The data release was followed by comments from Reserve Bank governor Glenn Stevens, suggesting a rise in interest rates was very unlikely in the near term.
BK Asset Management MD Kathy Lien said that were it not for the strong result in Australia’s trade balance, with a surplus of $1.2 billion in February, the local currency probably would have traded much lower.
“It is a bit surprising that RBA governor Stevens can maintain a glass half full view of the economy with manufacturing and service sector activity contracting last month,” Ms Lien said.
“According to the Chinese government’s official report, service sector activity in China also grew at a slower pace.
“These reports indicate that the domestic and external environment for Australia has weakened, which could trigger additional profit taking in the currency.”
AAP
