Australian dollar’s foreign exchange rate has made a positive start to 2012, posting a record high against the euro and touching a one month peak against the US dollar as positive manufacturing data from China boosted investor sentiment.
At 5.00pm AEST, the Australian dollar was trading at 102.90 US cents, up 1.3 per cent from Friday’s local close of 101.62 US cents. During the day, the currency moved between 102.17 US cents and 102.99 US cents, according to Iress data.
The intraday high was the Australian dollar’s strongest level against the US dollar since December 8, 2011. The local currency also touched 79.40 euro cents, the highest since the introduction of the euro in 1999.
The Australian dollar broke through 102 US cents during the offshore session, as market players cheered Chinese economic data that came out over the weekend.
China’s purchasing managers index (PMI), reported an expansion in manufacturing activity in December, after contracting in November.
ANZ Banking Group said the result was “encouraging” and suggested Chinese domestic demand had responded to the monetary policy easing of November last year and that demand for Chinese exports had not dropped as sharply as was feared.
“We expect manufacturing momentum will be maintained on strong holiday demand in January and a cautiously positive external environment, especially in the US,” ANZ said in a research note.
There was similarly positive manufacturing data from Australia and India.
The Australian dollar started the local session at 102.23 US cents and ground its way higher during the first trading day of 2012, amid a positive day on equity markets both at home and in the region.
Senior currency analyst at financial markets research group Forecast Lee Wai Tuck said the manufacturing data was positive for all risk assets.
“The Australian dollar is firmer across the board,” Mr Lee said from Singapore.
“This is despite the fact that there are still ongoing concerns about the eurozone as we start 2012.”
However, Mr Lee cautioned that currency markets were trading in thin conditions during the post-new year period, meaning large transactions could result in exaggerated moves. The Reserve Bank of Australia’s (RBA) trade weighted index was at 76.5, up from 75.8 last Friday.