RTTNews - During Asian deals on Wednesday, the Australian dollar soared to fresh multi-month highs against its U.S., European and Japanese counterparts as the Australian economy unexpectedly expanded in the first quarter of 2009, avoiding two consecutive quarters of contraction.
The Aussie also climbed to new multi-day highs against the New Zealand dollar and the Canadian dollar.
The Australian Bureau of Statistics said today that 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 an annual basis, GDP was also up 0.4 percent versus expectations for a 0.4 percent contraction after the 0.3 percent increase three months earlier.
Commenting on the data, Australia Treasury Secretary Ken Henry said that the data were boosted by solid gains among both net exports and household consumption.
Today's national accounts data shows a fairly large contribution to growth from net exports...in the March quarter, and that follows a substantial contribution to growth from net exports in the December quarter, Henry told the parliament in Canberra. We've got two quarters now of strong contribution from net exports and of course the other strong contributor in this quarter is household consumption.
Another report said that Australia's services sector activity contracted for the 14th consecutive month in May, although the pace slowed from that recorded in the first quarter. The Performance of Services Index rose 0.1 points from April to 39.9, but remained below the threshold level of 50. A reading above 50 indicates expansion, while a reading below 50 signals a contraction.
The stock markets across the Asia-pacific region opened sharply higher today, after a low-key night on Wall Street on the back of encouraging Australian growth data.
The positive economic reports encouraged traders by suggesting that the worst of the economic conditions may be behind. Yesterday, the Reserve Bank of Australia decided to maintain the cash rate at 3%. The central bank has slashed the cash rate by 125 basis points since December 2008 and the official cash rate now stands at its lowest level in 49 years.
Governor, Glenn Stevens said yesterday that monetary policy has now eased significantly but also added that he's prepared to cut rates further should the need arise. He said, Nonetheless the prospect of inflation declining over the medium term suggests that scope remains for some further easing of monetary policy, if needed.
The Australian shares rose 1 percent today, touching a fresh 6-1/2 month high. The benchmark Australian index S&P/ASX 200, which slipped to 3,946 after an early surge, has edged up into positive territory and is currently trading at 3,957.50, up 2.20 points over its previous close. The All Ordinaries index was up 5.60 points at 3,953.70.
The Australian dollar hovered near an 8-month high of 78.97 against the Japanese yen during Wednesday's early 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 78.64.
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%.
The Australian dollar rose to a fresh 8-month high of 0.8249 against the US dollar during today's early Asian trading and this may be compared to Tuesday's New York session closing value of 0.8211. On the upside, resistance is likely seen at the 0.828 level for the aussie.
With the advance, the aussie-dollar pair continued to move away from a new multi-month low of 0.6251 hit on February 02 and has gained around 24% since then.
In the new York session today, U.S. April factory orders, the May ISM Non-Manufacturing Composite Index, and the ADP private payrolls report are expected.
The Federal Reserve Chairman Ben Bernanke testifies before the House Budget Committee at 10:00 am ET.
The Australian dollar soared to its highest level since September 22, 2008 against the euro today. The Aussie rose to 1.7339 against the euro, compared to Tuesday's closing value of 1.7430. The next upside target for the Aussie is seen around the 1.725 level.
The euro has been hammered as the euro-zone jobless rate rose to a decade high of 9.2% in April, the Eurostat said Tuesday. Today's euro-zone GDP report will be closely watched by market players that is due out in the upcoming session. Analysts expect the seasonally adjusted preliminary first quarter gross domestic product to shrink 4.6 percent on year and 2.5 percent on quarter.
Services PMI reports from France, Euro-Zone, Germany as well as producer price index report from euro-zone are also expected in the European session.
Market players are also keeping a close eye on the European Central Bank rate decision that is due tomorrow. In May, the ECB has lowered its main refinancing rate to a record low of 1 per cent to boost consumption.
The Australian dollar jumped to a 2-week high against the Canadian dollar during Wednesday's early trading. At about 10:40 am ET, the Aussie-loonie pair hit as high as 0.8934, compared to 0.8879 hit late Tuesday in New York. On the upside, the Aussie may likely find resistance near the 0.897 level.
The Aussie that was worth 1.2513 against the NZ kiwi at yesterday's New York session close, rose to a 5-day high of 1.2637 by 10:125 pm ET. On the upside, the next likely target for the Aussie is seen around the 1.275 level.
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