RTTNews - Monday in Asia, the Australian and New Zealand dollars rose against their key counterparts as the global stock market rally increased demand for higher-yielding currencies.
Tracking gains on Wall Street last Friday, Asian markets have edged higher today with traders lapping up stocks on the back of fairly impressive quarterly results and on hopes of an economic revival. Higher commodity prices and better-than-expected data on U.S. housing starts are also contributing to the firm trend in the Asian region today.
Traders looked to results from Google and IBM, which firmly beat Wall Street estimates, while financial stalwarts Bank of America and Citigroup also beat forecasts, but by more modest margins. Conglomerate General Electric and toymaker Mattel also surpassed expectations.
Australia's S&P/ASX 200 index rose 1.3% today, while New Zealand's benchmark NZX 50 index climbed 0.45%.
Sentiment was also helped after reports suggested that U.S. commercial lender CIT Group Inc. clinched a last-minute $3 bilLion rescue by a group of bondholders and likely escaped bankruptcy. The New York-based bank has been scrambling to raise $2 billion to $4 billion after the federal government refused to bail out the company last week.
In economic news, producer prices in Australia dropped 0.8% sequentially in the second quarter, after falling 0.4% in the first quarter, the Australian Bureau of Statistics said today. Economists expected a decline of 0.2%. Domestic prices were flat on quarter, while import prices fell 5.9%.
Compared to the previous year, producer prices climbed 2.1% in the June quarter, reflecting a 14.3% rise in import prices and a 0.3% increase in import prices.
The Australian currency climbed to an 18-day high against the US dollar, 5-day high versus the European currency and a 13-day high versus the Japanese yen.
The Australian currency edged higher to an 18-day high of 0.8092 against the US currency during early Asian deals on Monday. If the Aussie gains further, 0.824 is seen as the next target level. The aussie-dollar pair closed Friday's North American session at 0.8020.
The aussie-dollar pair that traded near an 8-week low of 0.7705 on July 13 strengthened thereafter and has gained around 5% thus far.
Against the European currency, the Australian dollar reached a 5-day high of 1.7526 during Monday's early Asian deals. The Australian currency is currently trading at 1.7563, with 1.737 seen as the next target level. The euro-aussie pair closed last week's trading at 1.7591.
The aussie has appreciated around 3% after hitting a 2-month low of 1.8109 against the euro on July 13.
German producer prices continued to drop for the fourth month in June, data released by the Federal Statistical Office showed today. The producer price index or PPI fell 4.6% year-on-year in June, the fastest fall since December 1968, when producer prices dropped 5%. Economists had expected the PPI to fall 4.2% in June.
On a monthly basis, the PPI fell 0.1% in June after recording zero growth in May, while beating consensus for a 0.5% increase.
Against the Japanese yen, the aussie rose to a 13-day high of 76.66 during Monday's early deals. On the upside, 78.3 is seen as the next target level for the aussie. The aussie-yen pair closed Friday's New York deals at 75.62.
The aussie-yen pair that plunged to a new multi-week low of 70.80 on July 13 has gained around 7.4% since then.
The Australian currency showed weakness against its Canadian counterpart during today's early deals. At 12:15 am ET, the aussie-loonie pair touched a low of 0.8928, compared to Friday's closing value of 0.8954. The next downside target level for the pair is seen around 0.878.
The aussie-loonie pair lost ground after hitting a 10 1/2- month high of 0.9399 on June 30, 2009. Thus far, the pair has depreciated around 5%.
The Canadian dollar rallied as oil rose above $64 a barrel in Asian deals today, extending Friday's 2.5 percent gain, bolstered by a rally in stocks and a fall in the dollar on hopes of a global economic recovery.
U.S. crude oil for August delivery rose 54 cents to $64.10 a barrel at 11:00 pm ET, after settling up $1.54 at $63.56 on Friday. London Brent crude for September rose 55 cents to $65.93.
The New Zealand dollar also showed strength against its U.S., Europe and Japanese counterparts during Monday's early deals.
Services sector activity in New Zealand continued to contract in June, the latest survey from the Business New Zealand showed today. The index remained below the threshold reading of 50 for the 15th consecutive month.
The Performance of Services index decreased to 45 in June from 46.2 in the preceding month, with the index remaining in contraction since April last year. A reading above 50 indicates expansion, while a reading below 50 signals a contraction.
Against the U.S. currency, the New Zealand dollar climbed to a 4-day high of 0.6500 during early Asian deals on Monday. This may be compared to Friday's closing value of 0.6438. If the kiwi-dollar pair gains further, 0.657 is seen as the next target level.
The New Zealand dollar traded higher against the Japanese yen during Monday's early Asian deals. At 10:55 pm ET, the kiwi-yen pair rose to a 5-day high of 61.52, compared to 60.7 hit late New York Friday. The next upside target level for the pair is seen around 62.3.
The NZ dollar that closed Friday's North American session at 2.1924 against the European currency edged higher to 2.1826 during Monday's Asian deals. The euro-kiwi pair is currently trading at 2.1869 with 2.167 seen as the next target level.
The New Zealand currency largely bounced between 1.2464 and 1.2433 against the Australian dollar during Monday's early deals. The pair that closed last week's trading at 1.2471 is now worth 1.2456.
Looking ahead, the U.K. M4 money supply data for the month of June is expected in the upcoming European session.
Across the Atlantic, the U.S. leading indicators report for June has been slated for release in the North American session.
Earnings are set to take center stage again this week as more U.S. companies line up to report their quarterly results.
Companies reporting this week include American Express Co, Apple Inc, Boeing Co, Caterpillar Inc, Coca-Cola Co, DuPont Co, McDonald's Corp and Microsoft Corp.
The focus of this week also shifts to Federal Reserve Chairman Ben Bernanke's semiannual monetary policy testimony to Congress on Tuesday and Wednesday. Investors will be seeking clues on whether the Fed will begin unwinding some of the huge stimulus measures it undertook during the U.S. financial crisis.
If any signal comes from the Fed Chairman, investors will perceive it as evidence that the U.S. economy could soon show positive growth, bolstering risk appetite.
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