The Australian dollar has become the best performing currency overnight and is now targeting US73c after surprisingly positive growth data.
At 7.00am (AEDT) on Thursday, the local unit was trading at US72.96c, up from US72.40c on Wednesday.
Wednesday’s gross domestic product figures showed that the economy expanded 3.0 per cent through 2015.
This allayed fears that the slowdown in China would wreak havoc on the local economy, BK Asset Management’s managing director of FX strategy Boris Schlossberg said.
The growth was driven by consumer and government spending, which is offsetting declines in capital spending due to the mining sector’s contraction, he said.
“Over the past six months, the annualised growth of Australian GDP stands at 3.4 per cent,” he said.
“(That’s) one of the best rates in the G20 universe and goes a long way towards explaining the relatively sanguine view of the Reserve Bank.”
After leaving the cash rate unchanged on Tuesday, the RBA appeared nonplussed by the China risks, giving the impression that, short term, rates are likely to remain on hold.