SYDNEY • The Australian dollar sprung to a six-week high yesterday after surprisingly robust first-quarter data pointed to stronger-than-expected economic growth.
Closely watched retail sales also bounced in April.
The Australian dollar climbed to US$0.7615, a level not seen since April 24. The Aussie faces stiff chart resistance around US$0.7600. If it is able to sustain the move above current levels, the next stop is seen at US$0.7655.
It also strengthened against the Singdollar. One Australian dollar was equivalent to S$1.0224, compared with S$1.0091 on Friday.
Figures from the Australian Bureau of Statistics yesterday showed companies' gross operating profits climbed 5.9 per cent to a record in the March quarter, handily beating expectations for a 3 per cent increase. Separate data out yesterday showed retail sales bounced 0.4 per cent in April, beating expectations for a 0.2 per cent increase and a flat result in the previous month.
All eyes will be on first-quarter gross domestic product data due out tomorrow, which is expected to show the economy likely expanded by 0.8 per cent, taking annual growth to 2.7 per cent.
The Reserve Bank of Australia board meets today when it is seen as all but certain to hold its policy rate at a record low 1.50 per cent. The futures market is not fully priced for a hike until September next year.
2.7% Expected annual growth, should first-quarter gross domestic product data, due out tomorrow, show that Australia's economy likely expanded by 0.8 per cent.
"With profits at record highs, businesses are investing and hiring more staff. And those who are finding jobs are adding to spending and keeping the virtuous cycle going," said Sydney-based chief economist at CommSec Craig James.
"Clearly the Reserve Bank has done well by leaving rates low to stimulate the economy. And still there are few signs that inflationary pressures are emerging. The next rate move is up, but not for a number of months yet."