LONDON (Reuters) – The Australian dollar rose to a two-month high on Wednesday after Chinese economic growth beat forecasts and indicated to some investors that the worst is over for the global economy.

The Aussie’s jump encouraged some traders who have been searching for direction recently after a lull in currency markets but the euro and dollar moved little, suggesting broader volatility remained subdued.

The currency has been dogged by a dovish Reserve Bank of Australia but it rose above $0.72 for the first time since Feb. 21, after data showed China’s economy grew 6.4 percent in the first quarter.

The Australian dollar is sensitive to the economic fortunes of China, Australia’s biggest trading partner.

“It is becoming very clear again this morning what really matters for the Australian dollar is China. The currency is up despite the fact that the RBA rate meeting caused negative sentiment yesterday,” said Esther Maria Reichelt, an FX strategist at Commerzbank in Frankfurt.

On Tuesday, the Aussie took a brief hit after the RBA said it believes a cut in interest rates would be “appropriate” should inflation stay low and unemployment trend higher.

The U.S. dollar, often a safe haven, sagged against the euro after the Chinese data eased concerns about a global economic slowdown.

The dollar index against a basket of six major currencies dipped 0.2 percent to 96.846.

The euro rose 0.4 percent to $1.1300, paring the previous day’s losses.

The single currency came under pressure on Tuesday after Reuters quoted four sources with direct knowledge of discussions as saying several European Central Bank policymakers think the ECB’s economic projections are too optimistic, as economic weakness in China and trade tensions lingers.

The New Zealand dollar was down 0.5 percent at $0.6727 but the Aussie’s bounce helped it pull back from a 3-1/2-month low of $0.6668 plumbed earlier in the session.

The kiwi was hit after data showed New Zealand’s annual inflation slowed in the first quarter, which raised the odds of an interest rate cut in the coming months.

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