The Australian dollar was one of the best performing major currencies early on Tuesday after being boosted by some upbeat domestic data that could lead to better Q1 GDP data due out on Wednesday.
Solid export data have prompted economists to revise their expectations for economic growth. Australia’s current account deficit narrowed 8 per cent to A$20.8bn in the first quarter, down from a revised A$22.6bn in the previous quarter (previously A$21.1bn). Economists expected the deficit to have shrunk more, to A$19.5bn.
The better-than-expected result is likely to have pushed up the rate of quarterly growth beyond the 0.6 per cent average estimate by several economists. This would leave year-on-year growth at or above 2.7 per cent.
Other data out today included building approvals and private sector credit, which were both solid. Building approvals for April rose 3 per cent, confounding forecasts for a 3 per cent fall.
The Australian dollar reacted positively to today’s data and jumped 0.9 per cent at $0.7244 and close to its highs of the day.
That has trimmed its monthly decline to 4.7 per cent, making this the currency’s worst month since July last year.