After a brief slide in early Asian trading on Tuesday, the Australian and New Zealand dollars strengthened against their most major counterparts as investors bet on high-yielding assets on hopes that global central banks will soon resort to some monetary easing to revive the economies.
Though concern about the eurozone sovereign debt crisis eased, the market’s focus turn to the global economic condition and monetary policies, with the European Central Bank largely expected to cut its interest rates at a policy-setting meeting this Thursday.
Upbeat economic reports from Australia and China also strengthened the aussie and kiwi today.
Data from the Australian Bureau of Statistics showed that Australia’s building approvals climbed more than expected in May. Dwelling permits rose 27.3 percent on a month-on-month seasonally adjusted basis. This followed a 7.6 percent decline in the previous month. Economists had expected a 5 percent increase in approvals in May.
Meanwhile, a report from China Federation of Logistics and Purchasing showed that purchasing managers’ index for the non-manufacturing sector rose to 56.7 in June from 55.2 in May. An index reading above 50 indicates expansion of the sector.
The Australian dollar is now worth 1.0275 against the U.S. dollar and 81.92 against the Japanese yen, compared to yesterday’s close of 1.0249 and 81.49, respectively. The next upside target level for the aussie is seen at 1.030 against the greenback and 83.0 against the yen.
Against the euro, the Australian dollar is trading at a fresh 4- 1/2 -month high of 1.2252. If the aussie gains further, it may target the 1.220 level. At yesterday’s close, the euro-aussie pair was quoted at 1.2282.
Meanwhile, the Australian dollar that declined to a 4-day low of 1.0408 against the Canadian dollar at 8 pm ET rebounded thereafter and the pair is currently worth 1.0445. The near term resistance level for the aussie-loonie pair is seen at 1.046. The pair ended yesterday’s trading at 1.0427.
The New Zealand dollar also gained, hitting fresh 2-month highs of 64.33 against the yen and 0.8063 against the US dollar. The next upside target level for the kiwi is seen at 65.0 against the yen and 0.810 against the greenback. The kiwi-greenback and the kiwi-yen pairs were worth 0.8030 and 63.85, respectively at yesterday’s close.
Against the euro, the New Zealand dollar is trading at a fresh 5-month high of 1.5623. If the kiwi rises further, it may target the 1.560 level. The euro-kiwi pair closed yesterday’s trading at 1.5638.
But the aussie-kiwi pair showed choppy trading, with the pair bouncing between 1.275 and 1.277.
Investors now focus on Reserve Bank of Australia’s interest rate decision, which is due at 12:30 am ET. The central bank is widely expected to keep rates on hold at 3.50 percent.
In the European session, U.K. mortgage approvals and M4 money supply for May, construction PMI for June and the Eurozone PPI for May are slated for release.
From the U.S., factory goods orders data for May is expected in the New York morning session.