Australian Dollar Drops From Previous Gains as Economy Expands

05/03/2014 16:49 AST

The Australian dollar dropped from its early gains on Wednesday, following the upbeat GDP release. While the Japanese yen dropped to its lowest in seven weeks against the US dollar as the tensions in Ukraine eases.

The Australian gross domestic product (GDP) expanded by 0.8% in the December quarter, rising higher than analysts forecast of a 0.7% rise, according to the Australian Bureau of Statistics reports released. The annualized growth climbed by 2.8%, rising from the previous reading of 2.3% and surpassing analysts’ estimates of a 2.5% growth rate.

The Aussie dropped 60 pips, hitting a session low of $0.8934, after climbing an intraday high of $0.8995 per dollar. The Australian currency is currently at opening levels, rising 0.12% higher to $0.8958 as of 6:10am GMT.

The Japanese yen was at 102.21 per dollar at the time of writing, after dropping 0.7% on Tuesday, the most since January 14.

In the previous session the aussie was seen trading lower due to the speech given by the Reserve Bank of Australia (RBA) Governor Glenn Stevens, after he said in a statement that “ the exchange rate remains high by historical standards.”

Domestic consumption and net exports in Australia grew in as the nation’s economic output growth exceeded analysts’ estimates in the previous quarter, while investments dropped.

Policymakers from the National People’s Congress (NCP) meeting, which began on Wednesday; said they would keep last year’s inflation target of 3.5%. The economy expanded at a steady pace of 7.7% in 2013, as inflation was last seen at around 2.5%.

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