Aussie Mildly Higher on RBA Steven's Comment on China

Australian dollar is lifted by comments from RBA Governor Glenn Stevens about China. Stevens said that China will grow "pretty strongly on average for a while". He noted that "some slowing" in Chinese growth is needed to "reduce inflation" and put growth on a "more sustainable path". And even at the new target of 7.5%, Stevens expect China's GDP to "equal that of the United States, in purchasing-power parity terms, in about a decade" and "exceed that of the euro area within the next few years". Regarding Australia, Steve noted that the fiscal healthiness of the country attracted investors and created upward pressure on exchange rate and terms of trade. Meanwhile, domestically, he's concerned with job losses that are indirectly caused by the high exchange rate and Eurozone debt crisis.

German Chancellor urged to resolve the debate over the way to combine the temporary and the permanent rescue funds over the next two weeks, ahead of IMF Spring Meeting. Merkel remained firm on her stance that there is "no consideration" to increase the permanent ESM. And, as a compromise, it's believed that Germany could agree to let the temporary EFSF to remain in effect till mid-2013. Originally, the ESM is planned to replace the EFSF in 2013 but the launch is pushed ahead for year. In that case, the combined firepower of EFSF and ESM would be effective in size of EUR 750b.

IMF deputy managing director Zhu Min said that while global growth rate is slowing down, "things are getting better". However, he maintained that "risks are still on the downside". Zhu noted that financial markets in Europe are still "very fragile" and there is no room for "mistake" or "slip-up" in the market. Regarding China, Zhu said that economic trends and policies are pointing to soft landing. He urged China to rebalance its economy and encourage stronger domestic demand while moving to a more flexible exchange rate mechanism.

On the data front, New Zealand consumer Westpac consumer confidence improved to 102.4 in Q1. Eurozone current account, Canada wholesale sales and US NAHB housing market index will be released.