aussie dollars

"However, based on a soft-landing in China and an important yield differential, AUD should outperform into year-end, closing at 1.02" - Scotiabank.

The Australian dollar is on the march today, this after it was shown that Australian GDP grew 1.3 percent last quarter.

This compares with the median expectation of 0.6 percent, helping a market focused heavily on discounting near-term risks be surprised to the upside.

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The AUD suffered an almost 7% loss in May as risk aversion jumped higher, the outlook for global growth deteriorated and the central bank cut interest rates – a challenging combination for the high-beta, growth sensitive AUD.

Commenting on the outlook for the Australian dollar, Scotiabank say:

"The CFTC reports a record net short position of US$3.5 billion, as sentiment has turned violently against AUD.

"However, based on a soft-landing in China and an important yield differential, AUD should outperform into year-end, closing at 1.02."

The Australian dollar has been in steady depreciation mode since early February, reaching a level as low as US$0.9582 per AUD. Proximity does count for the Australian economy.

Evident signs of economic deceleration in both China and India are mirrored in Australia, influenced by commodity price deflation and lower export revenue.

Since February 24th, the aggregate CRY commodity price index has been on a steady decline; copper prices have virtually erased all gains achieved in 2012.

Gold prices have also suffered a similar decline, yet the renewed phase of global financial stress may increase demand for gold as a temporary safe-haven asset in the near term.

Declining retail sales, downward adjustment in housing prices and lower manufacturing activity compound the challenges affecting the Australian macroeconomic landscape.

Nevertheless, the resource-based economy remains supported by vast mining-related investment projects.