The market was generally upbeat in Asia today as commodities gained and Asian stocks advanced for the first time in three days on improved sentiment over the global economic outlook. The market kept the dollar biased south as gains spread amid heightened caution as eyes turn to Egypt today after protestors called on a million people to head to the streets calling for Hosni Mubarak to step down.
The data were supportive of the positive sentiment today, where Chinese manufacturing continued ahead of reports expected to show the sector also expanded in Europe and in the US. Japanese companies provided uplifting earnings and Australia though kept rates steady remained unexpectedly upbeat.
The positivity in the market and the optimism kept the bearish pressure on the U.S dollar. The dollar index gauging the federal currency's performance moved south from the highs recorded at 77.75 to the lows of 77.48 and currently hovering around 77.50.
For the European currencies, the euro and sterling both moved higher on the stronger market sentiment over the outlook for the recovery which offset the focus from lingering fiscal, monetary, and political woes. Both currencies took advantage of the weak dollar as well and were supported by market expectations of monetary tightening by both banks sooner than expected on the back of accelerating inflation!
The euro head higher, especially as the ECB rate decision approaches this Thursday and with the contained debt woes the market is focusing on Trichet and the ECB for any shift in stance. The pair traded bullishly with the start of the day currently hovering around 1.3727 recording so far the low of 1.3688 and the high of 1.3739; the breach of 1.3730 and stability above it will support the continuation of the upside move eyeing next areas of 1.3830.
As for sterling, it also advanced from opening levels of 1.6010 where it kept its lowest recorded around 1.6006 and advanced to the highs of 1.6078 and currently hovering around 1.6060 areas.
Meanwhile, for the surprise of the day, in fact it was the Reserve Bank of Australia and the effect it had on Aussie. The RBA held rates steady as expected at 4.75% yet Aussie still moved higher above parity with the US dollar as the bank was more upbeat than expected citing strong global economy and signs of rising private investment with higher commodity prices, which offset the effect of the floods and the downside pressure it might hold on the economy and inflation.
Aussie is trading at its highs at this time versus the dollar of 1.0041 rising off early lows recorded at 0.9961.