Monday morning in Asia, the Australian dollar jumped to its highest level in nearly 6-months against the Japanese yen as a surge in equities gave traders confidence to buy higher-yielding assets. The aussie also edged higher against the US dollar, but showed choppy trading against the euro and the loonie.
The Australian stock market is trading marginally higher today, following a modestly positive closing on Wall Street Friday. In the local market, financial stocks led the gainers, while resource stocks were hit by weaker commodity prices. In early trading, the benchmark S&P/ASX 200 index is gaining 10 points or 0.26% to 3,745, after closing more than one-and-a-half percent higher on Friday. The broader All Ordinaries index is up 11 points or 0.29% to 3,685.
Some positive remarks by the Fed Chairman Ben Bernanke on Friday also supported the markets. Bernanke said that programs enacted by the Federal Reserve to unfreeze the credit markets are working and have lowered the cost and increased the availability of credit. In the midst of extraordinarily challenging times for the financial system and economy, Bernanke stated that he is confident that growth will be restored.
On the economic front, the TD Securities-Melbourne Institute inflation gauge fell 0.1% in March, while the annual rate rose by 2.6%. The survey from Australia and New Zealand Banking Group showed that the total number of job advertisements fell 8.5% in March from the month before, to average 147,804 a week.
Australian Treasurer, Wayne Swan announced yesterday that a new agreement between the Government and the four major banks representing around 80% of the mortgage market to assist borrowers facing financial difficulty.
According to the deal, the banks will offer a range of options for assistance to people with mortgages who lose their jobs and fall into financial hardship. Borrowers who apply for temporary assistance may need to provide evidence of financial hardship.
The Aussie gained against the US currency in early Asian trading on Monday. At about 9:30 pm ET, the aussie-greenback pair reached 0.7211, up from Friday's close of 0.7159. If the pair advances further, it may likely target the 0.7232 level.
During early Asian deals on Monday, the Australian dollar strengthened to 72.78 against the Japanese yen. This set the highest point for the Australian currency since October 14, 2008. On the upside, 74.5 is seen as the next target level for the aussie-yen pair. At last week's close, the pair was quoted at 71.78.
The Bank of Japan began its two-day policy meeting today and will announce the rate decision tomorrow. Analysts expect the central to keep rates steady at 0.1%.
The Aussie bounced between 0.8827 and 0.8793 against the Canadian dollar during early Asian deals on Monday. The near term resistance and support levels for the aussie-loonie pair are seen around 0.89 and 0.875, respectively. The pair closed Friday's trading at 0.8815.
In early Asian trading on Monday, the Aussie moved between 1.8895 and 1.8833 against the euro. The next downside and upside target levels for the euro-aussie pair are seen around 1.873 and 1.901, respectively. The pair was worth 1.8855 at last week's close.
Looking ahead, Japan will provide February figures for its leading index, with analysts expecting a score of 75.3 following the 77.2 market in January.
In the European session, the Euro-zone PPI and retail sales-both for the month of February and the sentix investor confidence report for April have been slated for release.
Turning to the U.S., the Fed governor Kevin Warsh will speak about the financial markets at a conference in Washington D.C. at 1:00 pm ET.
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