RTTNews - Thursday in Asia, the Aussie jumped to fresh multi-month highs against its Japanese and European counterparts after a government report showed that Australia lost fewer jobs in May than economists forecast, adding to signs the economy may recover faster than the other developed nations.
The number of people employed fell 1,700 from April, when it climbed a revised 25,400, the statistics bureau said in Sydney today. Economists were looking for a 30,000 decline.
The report also showed that the jobless rate rose to 5.7 percent in May from a revised 5.5 percent in April.
Australia's unemployment contrasts with the U.S.'s jobless rate, which is at a 25-year high of 9.4 percent, Ireland's 11.8 percent rate and Spain's 17.4 percent.
Australia's dollar increased on speculation a strengthening economy will prompt central bank Governor Glenn Stevens to raise borrowing costs from a 49-year low. Consumer confidence jumped by the most in 22 years, business sentiment posted the biggest gain since 2001 in May and home loans rose for a seventh month as government stimulus and rate cuts began to revive domestic demand, reports showed this week.
To spur domestic demand, the government unveiled plans in May to embark on an unprecedented A$22 billion ($18 billion) program to build schools, roads and railways.
The Aussie, which closed yesterday's trading at 78.84 against the Japanese yen, strengthened to 79.64 during Asian deals on Thursday. This set the highest point for the Aussie since October 06, 2008. On the upside, the 80 level is seen as the next target for the Australian dollar.
The yen tumbled as Japan's economy shrank in the first quarter at its fastest pace since World War Two.
According to a report from the Ministry of Finance, Japan's economy shrank less than initially reported in the first quarter of 2009. The pace of contraction, however, was still fairly severe. The country's gross domestic product fell a price-adjusted 3.8% on quarter, or 14.2% in annualized terms, revised GDP data released by the Cabinet Office showed.
That was better than the initial estimate made three weeks ago of a 4.0% quarterly decline or 15.2% annualized, fall. Capital spending was revised up to an 8.9% quarter-over-quarter fall from a preliminary 10.4% drop.
The aussie-yen pair plunged to a record low of 55.08 in October 2008. Although the pair showed choppy trading thereafter, it fell in January 2009 and touched a 3-month low of 55.56 on February 02. Since then, the Aussie has been in an upward channel and has gained around 30%.
In Asian trading on Thursday, the Aussie rose to a new 8 1/2 -month high of 1.7281 against the euro. This may be compared to Wednesday's close of 1.7412. If the Australian dollar moves up further, it may likely target the 1.72 level.
Thus far this year, the Australian currency has advanced more than 13% against the euro.
Against the Canadian dollar, the Aussie jumped to a new multi-week high of 0.8971 in Asian deals on Thursday. The next upside target for the aussie-loonie pair is seen at a multi-month high of 0.8994. The pair was worth 0.8905 at yesterday's close.
The aussie-loonie pair has appreciated 3% after it reached a 3-week low of 0.8697on May 27.
During Asian deals on Thursday, the Aussie also advanced against the U.S. currency. Currently, the aussie-greenback pair is worth 0.8124, up from Wednesday's close of 0.8031.
The Aussie rose to a 1-week high of 0.8137 against the greenback in European deals yesterday. Although the aussie weakened in early New York deals, it bounced back in afternoon trading as the greenback tumbled after Federal Reserve's Beige Book said that conditions remained weak or deteriorated further during the period from mid-April through May.
The New Zealand dollar also surged up today after the RBNZ Governor Alan Bollard said an economic recovery would begin toward the end of the year.
Today, the Reserve Bank of New Zealand left the cash rate unchanged at 2.5 percent after having cut borrowing costs 5.75 points since last July to help kick-start the economy.
While announcing the decision, the RBNZ Governor Alan Bollard said We expect the New Zealand economy to begin growing again toward the end of this year, but the recovery is likely to be slow and fragile.
Bollard said the New Zealand dollar's surge over the past three months created unhelpful tension with the central bank's projections and put at risk the nation's recovery from its worst recession in more than three decades.
We expect to keep the cash rate at or below the current level through until the latter part of 2010, he said. The higher currency created a premature tightening in financial conditions and may stifle a recovery.
Benchmark interest rates are 3 percent in Australia and 2.5 percent in New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors to the South Pacific nations' higher-yielding assets.
In Asian deals on Thursday, the NZ dollar strengthened to a 6-day high of 0.6380 against the greenback and 62.55 against the yen. If the kiwi gains further, it may likely target 0.642 against the greenback and 63.1 against the yen. The kiwi-greenback and the kiwi-yen pairs were worth 0.6303 and 61.89, respectively at yesterday's close.
The NZ dollar that closed yesterday's trading at 2.2374 against the euro climbed to an 8-day high of 2.2012 during Asian deals on Thursday. The next upside target level for the kiwi is seen at 2.192.
Looking ahead, the European Central Bank is due to release its monthly report at 4:00 am ET.
From U.S., the retail sales for May, business inventories for April and the weekly jobless claims report are expected.
Atlanta Federal Reserve Bank President Dennis Lockhart is due to deliver a speech on the economy before National Association of Securities Professionals annual conference in Atlanta at 1:05 PM Eastern Time.
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