RTTNews - Wednesday in Asia, the Australian dollar jumped to new multi-day highs against other majors as Australia's consumer confidence recorded the largest jump in 22 years in June.
The Australian dollar thus reached a 1-week high against the euro, 5-day high against greenback and the yen a 2-day high against the Canadian dollar.
The Westpac-Melbourne Institute Index of consumer sentiment rose by 12.7 percent to 100.1 in June from a reading of 88.8 in the previous month. It is the first time since January 2008 that reading was above 100.
Commenting on the report Westpac Senior Economist Bill Evans noted that a number of factors were responsible for the rise in consumer sentiment. The positive news about GDP growth was encouraging from consumers' perspective since they had already benefited from a 385 basis points cut in the variable mortgage rate, and from A$14 billion in government transfers with another A$5 billion to come. With the employment rate falling to 5.4% in April, consumer became confident the worst had passed.
The report had supported expectations that the Australian central bank has finished cutting interest rates. Earlier this month, the central bank held its key rate unchanged at 3% after reducing the rate by a total of 4.25 percentage points since September 2008.
On Friday, Reserve Bank of Australia's assistant governor for financial markets Guy debelle told that recent improvements in Australia's credit, currency and swap markets and re-pricing in some of the markets indicate that the country's financial markets are in a good position now.
Recent economic reports have been giving firm support to the Aussie dollar. A government data released during early June showed that Australian economy unexpectedly expanded in the first quarter of 2009, avoiding two consecutive quarters of contraction. Australia's first quarter gross domestic product grew 0.4 percent after shrinking a revised 0.6 percent in the previous three months. That was significantly higher than the 0.2 percent quarterly contraction that analysts had been expecting. On the same day, the Aussie climbed to new multi-day highs against the New Zealand dollar and the Canadian dollar.
A Rebound in equities also supported the upward movement of the Aussie dollar. The stock markets across the Asia-Pacific region were trading higher today on speculation that the global recession is easing. The Australian market surged higher today on the back of strong buying in resources and energy stocks, buoyed by higher metal and oil prices. The Australian benchmark index S&P/ASX 200 is currently trading at 3,998, up 63 points over its previous close. The broader All Ordinaries index is up by 58.5 points at 3,992.
The Australian dollar hovered near an 5-day high of 79.06 against the Japanese yen during Wednesday's Asian trading. The next resistance for the pair is seen around the 81.2 level. At yesterday's New York session close, the aussie-yen pair was quoted at 78.07.
The aussie-yen pair slumped to a record low of 55.08 on October 24, 2008. Although the pair showed choppy trading thereafter, it fell in January 2009 and touched a new multi-month low of 55.56 on February 02. Since then, the Aussie has been in an upward channel and has gained around 29.6%.
A Stock market rally and bleak economic reports from the Japan aggravated the weakness of the yen. Latest economic report from the Cabinet Office said that Japan's core machinery orders were down 5.4 percent on month in April, falling to 688.8 billion yen to a 22-year low.
That was far worse than analyst expectations for a 0.4 percent monthly increase following the 1.3 percent decline in March and the 0.6 percent gain in February.
At the same time, a report by Bank of Japan said that the price of domestic corporate goods in Japan eased 0.4 percent in May compared to the previous month, falling for the third straight month.
That was roughly in line with the 0.3 percent monthly decline that analyst had been expecting following the revised 0.6 percent decline in April and the 0.2 percent contraction in March.
The Australian dollar rose to a 5-day high of 0.8100 against the US dollar during today's Asian trading and this may be compared to Tuesday's New York session closing value of 0.8016. On the upside, resistance is seen at the 0.8267 level for the aussie.
The Chicago Federal Reserve Bank President Charles Evans is schedule to speak on the current crisis before the Executives Club of Chicago Joint Committee in Chicago at 8 am ET.
Half an hour later, the trade gap data for April is due out. Economists estimate that the trade gap widened to $28.7 billion in the month.
The Federal Reserve is due to release its Beige Book, which is a compilation of anecdotal evidence on economic conditions from each of the 12 Federal Reserve districts, at 2 pm ET .
Against the common unit of Europe, the Australian dollar has not only strengthened but hit a 1-week high level of 1.7426. This may be compared to Tuesday's closing value of 1.7557. The next upside target for the Aussie is seen around the1.730 level.
Traders are now likely to focus on French Industrial and Manufacturing production, Italian Industrial production-all for the month of April and the Italian GDP report for the first quarter.
The Australian dollar jumped to a 2-day high against the Canadian dollar during Wednesday's early trading. At about 2:20 am ET, the Aussie-loonie pair hit as high as 0.8912, compared to 0.8854 hit late Tuesday in New York. On the upside, the Aussie may likely find resistance near the 0.897 level.
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