In early deals on Thursday, the New Zealand dollar soared to multi-day highs against its major counterparts as New Zealand's home sales increased in March.
A total of 6,694 homes were sold in March, the Auckland-based Real Estate Institute of New Zealand Inc. said today. Sales rose from a record-low of 3,706 in January and 5,228 in February.
Home sales rose 30.5 percent from a year earlier. That's the first annual increase since April 2007. Still, sales were 39 percent less than in March 2007.
Variable home-loan interest rates are at a seven-year low because Reserve Bank Governor Alan Bollard has cut borrowing costs by 5.25 percentage points since July 2008 to kick-start the economy. Cheaper debt and falling house prices have made property more affordable for consumers, and realtors are receiving more enquiries, the institute said.
A rebound in stock prices also supported the NZ dollar. Asian stocks rose as Japan's ruling party proposed $154 billion of extra spending and the country's machinery orders unexpectedly increased.
Japan's ruling Liberal Democratic Party (LDP) has approved fresh stimulus spending of JPY 15.4 trillion (USD 154 billion) to resuscitate the world's second-biggest economy from its deepest recession since World War II, reports say.
The figure amounts to 3.1 percent of Japan's gross domestic product and will be the largest ever for a single year, surpassing former Prime Minister Keizo Obuchi's JPY 8.5 trillion stimulus during the Asian financial crisis in 1998. Japan's Prime Minister Taro Aso has unveiled two packages totaling JPY 10 trillion since he took office in September.
The approval came soon after the leaders of the Group of 20 (G-20) pledged last week to spur growth amid signs that the global economy is beginning to recover from its worst financial crisis since the Great Depression.
The New Zealand dollar, which closed yesterday's trading at 0.5799 against the U.S. currency strengthened to a 2-day high of 0.5846 during early deals on Thursday. If the kiwi-greenback pair moves up further, it may find resistance around the 0.589 level.
In early trading on Thursday, the New Zealand dollar rose to a 2-day high of 58.45 against the Japanese yen. This may be compared to Wednesday's closing value of 57.86. On the upside, 59 is seen as next target level for the kiwi.
In economic news from Japan, core machine orders unexpectedly climbed 1.4 percent in February compared to the previous month, the Cabinet Office said. That snapped a four-month string of decline, which was the stat's longest losing streak ever. The February figure came in higher than analyst expectations for a 6.9 percent decline after the 3.2 percent fall in the previous month.
The New Zealand dollar climbed to a 2-day high of 1.2198 against the Aussie during early deals on Thursday. If the kiwi advances further, it may likely target the 1.21 level. The aussie-kiwi pair was worth 1.2268 at Wednesday's North American session close.
The Aussie showed weakness today as Australia's unemployment rate jumped to a 5-year high in March, adding to signs the nation is in its first recession in almost two decades. The Australian Bureau of Statistics said today that the nation's jobless rate rose to a five-year high of 5.7 percent in March from 5.2 percent gain in February and it also rose more than economists forecast of 5.5% increase.
Another report showed that the median rate of inflation expected by Australians increased in April to 2.4 percent from the March rate of 2.2 percent. Survey results released by the Melbourne Institute showed the median inflation expectation for April was below the 4.5 percent figure reported for the same month last year.
During early deals on Thursday, the New Zealand dollar jumped to a 3-day high of 2.2733 against the European currency. The next upside target level for the kiwi is seen at 1.271. At Wednesday's close, the euro-kiwi pair was quoted at 2.2912.
Germany's Federal Statistical Office said in a final report that the consumer price index, or CPI, rose 0.5% year-on-year in March, slower than the 1% increase in the previous month. This was the lowest inflation since July 1999. Compared with February, the CPI dropped 0.1% in March, in contrast to a 0.6% rise seen in the preceding month.
Looking ahead, the ECB monthly report, German and the Italian industrial production for February are expected in the upcoming hours.
Across the Atlantic, the US February trade balance, import and export price index for March and the weekly jobless claims reports have been slated for release in the New York session.
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