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The deputy director of China’s central financial and economic affairs commission said on Saturday that the country’s economy is estimated to grow by about 5% this year, per Reuters.  Han Wenxiu, a senior official in the ruling Communist Party, stated that China is expected to contribute close to 30% of global growth, adding that there was a need to boost consumption and view domestic demand expansion as a long-term strategic move that would become the main driving force for economic growth.  Market reaction At the press time, the AUD/USD pair was up 0.17% on the day to trade at 0.6368. Australian Dollar FAQs One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD. The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive. China is Australia’s largest trading…

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Filed under: News - @ December 16, 2024 1:16 am