The Australian dollar rose to its strongest level in more than one week on Thursday on positive business investment outlook.
The Aussie surged to a high of 93.02 cents against the U.S. dollar after Australian Bureau of Statistics reported that capital expenditure by businesses will rise in the next financial year. The Australian currency was trading at 92.88 U.S. cents in late trading, reported the Sydney Morning Herald.
Though capital expenditure declined by 4.2 percent in the first three months of the year, the ABS forecasted that business investment will rise in the 2014-15 fiscal year. Capex is estimated to rise to $137 billion, a growth of 9.3 percent from the previous estimate of $125 billion. Services investment is expected to accelerate, while investment in mining sector will not drop more than previously estimated.
It certainly got a reasonable bump up,” said Joe Capurso, a currency strategist with the Commonwealth Bank.”The Aussie dollar will be at 93c by the end of the week, if not tonight (Thursday). In our view it will be high 90s by the end of the year.”
The Aussie was unsteady in the early trade after prices of iron ore declined, sending the currency to 96.80 U.S. cents, the lowest this year.
“The RBA would be pretty happy at the signs of the service sector picking up'” said Su-Lin Ong, the head of fixed income and economics at RBC Capital Markets. “The RBA will probably be on hold for an extended period of time.”
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To contact the reporter of this story; Yashu Gola at email@example.com