Thursday morning in Asia, the Australian dollar staged a strong rally against its major counterparts after a report showed that the nation's trade surplus surprisingly widened in February. Initial strength in the equity market also boosted the currency. The Aussie jumped to a new multi-month high against the euro and multi-day highs against the greenback and yen.
Australia posted a seasonally adjusted trade surplus of A$2.1 billion in February, the Australian Bureau of Statistics said today. That was sharply higher than analyst expectations for a surplus of A$700 million following the A$970 million surplus in January.
Imports were down 1 percent on month, falling to A$22.82 billion from A$22.96 billion in January, the report said. Exports jumped 4 percent, climbing to A$24.93 billion from A$23.88 billion in the previous month.
The Australian stock market was trading higher today, following a triple-digit gain on Wall Street overnight. In early trading, the benchmark S&P/ASX 200 index was gaining 75 points or 2.09% to 3,655, after closing more nearly unchanged on Wednesday. The broader All Ordinaries index is up 70 points or 1.98% to 3,597.
The Australian dollar advanced to a 9-day high of 69.51 against the Japanese yen by 10:25 pm ET, compared to 68.93 hit late New York Wednesday. If the aussie climbs further, resistance is seen around the 72.1 level. The aussie-yen pair is presently trading near 69.4.
In economic news from Japan, the monetary base grew 6.9 percent on year in March, the Bank of Japan said today, standing at 94.46 trillion yen. That's up from 93.65 trillion yen in February, which saw a 6.4 percent annual increase. On a seasonally adjusted basis, the monetary base was up 5.6 percent on month at 94.3 trillion yen.
Against the US dollar, the Australian currency jumped to a weekly high of 0.7041 by 10:30 pm ET. This may be compared to Wednesday's New York session closing value of 0.6995. The aussie-buck pair is currently worth 0.7034 with 0.707 seen as the next target level.
Investors were in dismay in the New York session yesterday after the Private sector employment fell by much more than expected in March. According to a report released by Automatic Data Processing, Inc. (ADP), non-farm private employment fell by 742,000 jobs in March following a revised decrease of 706,000 jobs in February. Economists had expected a decrease of 663,000 jobs compared to the decrease of 697,000 jobs originally reported for the previous month.
At the same time, the U.S. Commerce Department revealed that construction spending fell by 0.9 percent in February. This represented the fifth consecutive month of declines. February's decline followed a revised drop of 3.5 percent in January and a fall of 3.1 percent in December. Economists had expected a decline of about 2 percent.
Also, activity in the manufacturing sector contracted for the fourteenth consecutive month in March, according to a report released by the Institute for Supply Management yesterday. The ISM said its purchasing managers index edged up to 36.3 in March from 35.8 in February, with a reading below 50 indicating a contraction in the sector. Economists had been expecting the index to come in at 36.0.
The Australian currency touched 0.8837 against the Canadian dollar by 10:25 pm ET and thus challenged yesterday's new multi-month high. The aussie-loonie pair that closed Wednesday's New York deals at 0.8815 is currently trading near 0.883.
Against its European counterpart, the Australian dollar soared to 1.8883 by 10:25 pm ET. This set the highest mark for the Aussie since March 7. On the upside, 1.852 is seen as the next target level for the Australian currency. The euro-aussie pair, which closed Wednesday's North American deals at 1.8951, is currently quoted near 1.89.
Market players are keenly awaiting the European Central Bank's rate announcement today. Amid expectations that it will trim its main policy rate by half a percentage point to a new record low of 1 percent, the market is keen to see how far it might follow other central banks such as the Fed in taking unconventional steps to shore up the economy.
Before the rate announcement, traders are likely to focus on the French producer price index for February in the upcoming session. Analysts expect the index to drop 3.4 percent year-on-year in February.
Market participants also keenly await the outcome of the G-20 meeting and the market will be closely watching to see what measures they will discuss to fight the global economic crisis.
Turning to the U.S., the Labor Department's customary weekly jobless claims report for the week ended March 28 and the Factory orders for February are due out in the New York session.
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