RTTNews - Friday in Asia, the Australian dollar rose to a 10 1/2 -month high against its Canadian counterpart on the back of strong equities. The aussie also climbed to a 1-week high against the U.S. dollar and a 4-day high versus the currencies of Europe, Japan and New Zealand.

The Australian stock market traded higher today following the overnight rally on Wall Street. Higher commodity and oil prices helped lift resource stocks. Banking stocks are also trading in positive territory.

At 1:31 am ET, Australia's All Ordinaries index rose 53.20 points or 1.38% to 3,905.40.

The Australian dollar has been strengthening for the past two days after stocks climbed and the International Monetary Fund raised economic growth outlook for Australia and now expects the economy to shrink at a slower pace this year. Moreover, it raised its growth forecast for the next year.

In a report describing the preliminary findings of its staff, the IMF said on Wednesday that it expects the Australian economy to shrink 0.5% this year, as domestic demand contracts. This is slower than its forecast of a 1.4% contraction made in April. However, the lender projects the economy to grow 1.5% next year, faster than its earlier forecast of 0.6% growth.

The IMF said downside risks to the outlook could be that the world economy takes longer to recover, with significant spillovers to the Australian economy through commodity incomes, external demand and international capital markets. Moreover, a sharper than expected worsening of banks' assets, possibly from lower house prices, could deepen the downturn, although it was unlikely.

Against the U.S. dollar, the Australian currency climbed to a 1-week high of 0.8077 during early Asian deals on Friday. If the pair gains further, 0.824 is seen as the next target level. The aussie-dollar pair closed Thursday's North American session at 0.8028.

The Australian currency gained ground after hitting a new multi-week low of 0.7792 on June 23. Since then, the aussie-dollar pair has appreciated around 4%.

The greenback weakened following a report from the U.S. Labor Department yesterday, which showed that initial jobless claims rose unexpectedly for the week ended June 20th.

The report showed that initial jobless claims rose to 627,000 from the previous week's revised figure of 612,000. Economists had expected jobless claims to edge down to 600,000 from the 608,000 originally reported for the previous week. With the unexpected increase, jobless claims remained above the 600,000 level for the twenty-first consecutive week.

Separately, a report released by the Commerce Department yesterday showed that economic activity in the first three months of the year contracted by less than previously expected, although the report also showed a downward revision to the pace of consumer spending growth.

The report indicated that gross domestic product fell 5.5 percent in the first quarter compared to the 5.7 percent decrease that had been reported. The revision came as a surprise to economists, who had expected the drop in GDP to be unchanged at 5.7 percent.

The Australian dollar edged higher to 0.9308 against its Canadian counterpart during today's early Asian deals. This set the highest mark for the pair since August 14, 2008. The next upside target level for the aussie-loonie pair is seen around 0.941. The pair closed yesterday's New York deals at 0.9270.

The aussie-loonie pair has gained around 23% after it touched a multi-year low of 0.7175 in October 8, 2008.

During Friday's early Asian trading, the Australian currency advanced to a 4-day high of 77.51 against the Japanese yen, compared to 77.05 hit late New York Thursday. The aussie-yen pair is presently trading at 77.34 with 78.4 seen as the next target level.

The yen has been weakening against the aussie after it reached a 1-month high of 74.06 on Tuesday as Japan's trade surplus declined and the nation's corporate service prices fell at a record pace in the month of May, casting doubt on the nation's growth prospects as the economy struggles to emerge from its worst postwar recession. Thus far, the yen has lost around 5% versus the aussie.

A government report showed today that consumer prices in Japan contracted sharply in May.

Japan's Ministry of Internal Affairs and Communications reported that the overall Consumer Price Index fell by 1.1% in May, and THE Core CPI, which excludes volatile fresh food prices, also fell 1.1%.

Falling energy prices led to the lower price readings. The overall CPI for the Tokyo Metropolitan region, which is seen as a leading indicator for the national picture, contracted 1.5% in June, while Tokyo Core CPI was down 1.3%.

Worldwide inflation is easing as energy costs retreat and the worst global recession since the Great Depression forces companies to charge less.

The Australian currency rose to a 4-day high of 1.2554 against the New Zealand dollar and 1.7393 versus the European currency in Asian deals today. Currently, the aussie is trading at 1.2532 against the kiwi and 1.7425 against the euro, compared to Thursday's closing value of 1.2449 and 1.7434, respectively. If the Aussie advances further, it may likely target 1.257 against the NZ dollar and 1.792 against the euro.

The New Zealand dollar edged sharply down against its major rivals today morning in Asia after a report showed that New Zealand's recession continued unabated in the first quarter of 2009. The New Zealand currency thus reached a 4-day low against the Australian dollar and dropped from weekly highs against the euro and the yen.

Statistics New Zealand reported today that the nation's Gross Domestic Product declined 1.0 percent in the three months to March. It marked the 5th straight quarter of declining GDP.

The quarterly contraction was the largest in 18 years. It was larger than the 0.7 percent decline forecast by most economists.

In the European session, the German May import price index and the French final first quarter GDP are due for release.

Across the Atlantic, the Bureau of Economic Analysis is due to release its personal income & outlays report for May. Economists estimate the report, which is due out at 8:30 AM ET, to show that personal income rose 0.3% and the personal spending increased 0.4% in the month.

The Reuters/University of Michigan's final report on the consumer sentiment index for June is scheduled to be released at 10 AM ET. Consumer confidence is expected to rise in the month, with economists forecasting an increase in the index to 69 from the previous month's reading of 68.7.

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