Let’s check the current situation for today. On Friday, the Australian dollar rallied. Chinese data showed that the world’s second-biggest economy might be starting to diminish. The offshore yuan rose to a six-month high against the dollar.
The Aussie often trades as a liquid proxy for the Chinese yuan. Australia’s open and small economy is heavily reliant on exports to China.
In the December quarter from a year earlier, China’s economy grew 6.0%. The 6.1% growth of 2019 was the slowest in the last 29 years. Beijing will most probably introduce in 2020 more stimulus measures. Demand and investment remain sluggish.
Senior market analyst at OANDA Craig Erlam said that Chinese data overnight offered some cause for optimism. The phase one deal with the United States partially lifted the cloud of uncertainty hanging over the economy.
Against the greenback, the New Zealand dollar and its counterpart Aussie rose 0.2%. In the foreign market, the Chinese currency rose 0.2% to 6.8636 yuan per dollar.
On Wednesday, the phase one China-U.S. trade deal was signed. The optimism about it raised hopes that the economy might be bottoming out.
A senior currency analyst at MUFG Bank in Tokyo is Masashi Hashimoto. He said that there were rebounds in some areas such as industrial output and fixed-income investments. It is in line with other signs that China’s deceleration will end soon.
Against a broad basket of currencies, the dollar held its ground. Nevertheless, the dollar was on track for a small weekly loss. The dollar’s index tracking its strength against six major peers has little changed at 97.31.
For the dollar, recent data was mildly supportive.
For a third straight month in December, United States retail sales increased. Meanwhile, the number of American filing claims of unemployment benefits dropped last week for a fifth consecutive week.
That is the situation in the market.