RTTNews - Monday in Asia, the Aussie surged up against its major counterparts as an index measuring manufacturing activity in Australia contracted in July at the slowest pace since September 2008, adding to signs that government spending and the lowest borrowing costs in half a century are stoking demand.

The Australian dollar soared to a fresh multi-month high against the greenback, 12-day high against the Canadian dollar and a 4-day high against the euro.

The performance of manufacturing index climbed to a seasonally adjusted 44.5 in July from 38.4 in June, the highest reading in 10 months. Further, the improvement in the reading mirrors the trend in global manufacturing since early 2009, with the global PMI standing at 46.9 in June, the AiG said.

Another report showed that total job advertisements in Australia dropped in July at a slower pace, adding to signs the nation's economy may be strengthening.

Jobs advertised in newspapers and on the Internet declined 1.7 percent from June, when they fell 6.7 percent, according to an Australia & New Zealand Banking Group Ltd. report released in Melbourne today.

Today's reports support central bank Governor Glenn Stevens' view that the economy may rebound faster than the Reserve Bank of Australia forecast six months ago as consumer and business confidence climbs.

The Reserve Bank of Australia is scheduled to meet tomorrow to decide on interest rates. Analysts expect the central bank to keep the benchmark lending rate at a 49 year-low of 3 percent.

The Aussie also strengthened as most Asian stocks rose today on mounting evidence that the global economic recovery is picking up speed, giving a boost to oil and copper prices while hurting the safe-haven U.S. dollar.

Two surveys showed Chinese factory growth accelerated in July thanks to a revived domestic economy and a slight pick-up in demand for its exports.

The Australian benchmark index S&P/ASX 200 is currently trading at 4,273, up 28.8 points or 0.7% over its previous close. The broader All Ordinaries index is up by 28.4 points or 0.7% at 4,278.

During early Asian deals on Monday, the Australian dollar strengthened to 0.8396 against the U.S. currency. This set the highest point for the Aussie since September 26, 2008. On the upside, 0.852 is seen as the next target level for the Australian currency. At last week's close, the aussie-greenback pair was quoted at 0.8357.

The dollar fell broadly today and hit its lowest point this year against most major currencies after higher oil prices, steady global stock markets and U.S. GDP data boosted investments in riskier assets.

The U.S. economy contracted at a better-than-forecast 1 percent annual pace in the second quarter, the Commerce Department reported July 31. Stabilization of housing markets, a lessening of financial turmoil and increased government spending-all suggest the longest recession since the 1930s may be close to ending.

The dollar's slide was broad based, with the sterling striking its highest level in nine-months and the euro rising to a two-month peak.

The Australian dollar rose 2% percent against the greenback last week as the Reserve Bank of Australia Governor Glenn Stevens said the nation's downturn may not be one of the more serious of the post-World War II era.

He also sounded more hawkish on interest rates, noting that low rates could inflate house prices.

Overall, the aussie-greenback pair advanced more than 3% in July on optimism the global recession will ease soon.

The Aussie climbed to a 4-day high of 1.70 against the euro in early Asian deals on Monday. If the aussie gains further, it may likely target an 11-month high of 1.699.

The Aussie surged up to an 11-month high of 1.6993 against the euro on July 30. Although the Aussie lost 1% in Asian deals on Friday, it rebounded in the European session as the euro declined after reports showed that Euro-zone consumer price inflation stayed negative for the second month in July and the unemployment reached the highest level since June 1999 as more employers cut headcount in June.

The euro-aussie pair closed Friday's trading at 1.7071.

In early Asian deals on Monday, the Aussie jumped to a 12-day high of 0.9039 against the Canadian dollar. The next upside target level for the Australian currency is seen at 0.913.

The Canadian dollar slumped 0.7% against the Aussie on Friday after Statistics Canada reported that Canada's economy contracted for a 10th month in May because of falling manufacturing output, and declines in the mining and energy industries.

The GDP decreased 0.5% in May, compared to a 0.2% fall in April. Economist estimated a 0.3% GDP decline for May.

The report adds to evidence the world's eighth-largest economy extended its contraction in the second quarter as the global slump saps orders for Canadian exports.

The economy fell 3.5 percent in May from the year-ago month, the biggest drop since October 1982, Statistics Canada said.

After hitting a 1 1/2 -month low of 0.8802 against the loonie on July 24, the Aussie appreciated 2% last week and closed the week's trading at 0.9014.

The Australian dollar, which closed last week's trading at 79.08 against the yen rose to 79.51 in early Asian deals on Monday. The next upside target for the aussie-yen pair is seen at a 1 1/2 -month high of 79.60.

Looking ahead, the German June retail sales and the manufacturing PMI reports for July from the major European economies are expected in the upcoming European session.

In the U.S., the Institute of Supply Management will release its manufacturing survey results for July at 10:00 am ET. At the same time, the Department of Commerce will release its construction spending report for June.

For comments and feedback: contact editorial@rttnews.com