The greenback recovered against the euro following recent sessions at record lows near the 1.60-level, but plunged to a fresh 24-year low versus the Australian dollar at 0.9540. Amid a dearth of US economic reports, traders focused on global central banks' policy outlooks.
The US economic calendar picks up in the Thursday session with the release of March durable goods orders, weekly jobless claims and March new home sales. The headline durable goods orders report is seen flat in March, versus a 1.1% drop in February. The ex-transports durable goods orders are expected to improve to 0.4%, reversing the 2.4% decline a month earlier. Weekly jobless claims are largely unchanged, up slightly to 375k from 372k in the prior week. Meanwhile, March new home sales are expected to slip to 580k, versus 590k from February.
The euro eased off its all-time highs above the 1.60-level following comments from Luxemburg Finance Minister Juncker, who expressed unease about the euro's strength and its potential to be detrimental to Eurozone growth. However, Germany's Economy Minister Glos offered a contrasting view, saying Germany's economy is coping well so far and was not hurt by the strengthening euro.
Aussie Rallies on Inflation
The Australian dollar surged to its highest level in 24-years against its American namesake, breaching the 0.95-level to 0.9540. The catalyst for the move higher was a report revealing a spike in Australia's core inflation, which posted its largest quarterly gain in 17-years. The Q1 consumer price index beat out expectations, gaining 1.3% q/q and 4.2% y/y. The sharp increase in inflation fuelled fears that the Reserve Bank of Australia will maintain its hawkish bias. We continue to expect another 25-basis point rate hike from the RBA to 7.50% by year end, while remaining on hold for the first half of 2009.
The Aussie continues to benefit from tempered expectations for an RBA rate cut in the near-term, climbing past the 0.95-mark. Interim resistance is seen at 0.9540, followed by 0.9575 and 0.96. Subsequent ceilings are seen at 0.9630, followed by 0.9660 and our near-term price target of 0.97. Support is seen at 0.9470, backed by 0.9440 and 0.94. Additional floors are eyed at 0.9350, followed by 0.93 and 0.9240.