The Australian dollar that surged up to near a 3-week high against the US dollar in early Tuesday Asian deals on the back of a rally in most Asian stocks eased after ratings agency Moody’s placed Japan’s Aa2 government ratings on review for possible downgrade.
Meanwhile, the Australian dollar fell to near a 4-month low against the NZ dollar, 11-day low against the euro and a 4-day low against the Canadian dollar.
Against the yen, the aussie spiked up to an 11-day high on yen’s slide.
Most Asian stocks are trading higher today on optimism over more assistance for Greece. Australia’s S&P 200 index is now up 42.80 points or 0.9 percent to 4,710.30 and the broader All Ordinaries index is up by 42.90 points or 0.9 percent to 4,789.90.
Moody’s Investors Service placed the Japanese government’s Aa2 local and foreign currency bond ratings on review for possible downgrade, citing concerns that faltering economic prospects and a weak policy response would make the government’s ability to achieve a credible deficit reduction target more challenging.
The report said that without an effective strategy, government debt will rise inexorably from a level which already is well above that of other advanced economies.
Data from the Australian Bureau of Statistics said today that the number of building approvals in Australia declined 1.3 percent in April after a revised 8.6 percent in the previous month. Economists were looking for a 1.8 percent fall.
Compared to a year earlier, the number of total building approvals declined 11.5 percent after adjusting to seasonal variations.
A separate report from the Statistical Bureau showed that Australia’s current account deficit increased 29 percent in the first quarter from the December quarter of 2010 to A$10.45 billion.
The Australian dollar is now trading near a 4-month low of 1.2984 against the New Zealand dollar with 1.290 seen as the next downside target level. At yesterday’s close, the aussie-kiwi pair was quoted at 1.3101.
The New Zealand dollar was supported by an upbeat domestic business confidence data.
The National Bank of New Zealand’s monthly business outlook report showed that a net 39.7 percent companies expect better times ahead for their own business, compared to 29.5 percent in April.
A net 38.3 percent of businesses expect better times for the economy over the coming year, up 24 points on April. General business confidence has now lifted 47 points in two months, more than reversing the post-quake decline in March, the bank said.
Against the euro, the Australian dollar is presently trading at an 11-day low of 1.3440, compared to yesterday’s close of 1.3366. The next downside target level for the aussie is seen at 1.345.
The Australian dollar is currently worth 1.0710 against the US dollar, down from near a 3-week high of 1.0759 hit at 10:15 pm ET. If the aussie weakens further, it may target the 1.068 level. The aussie-greenback pair was worth 1.0692 at yesterday’s close.
The Australian dollar that climbed to 1.0493 against the Canadian dollar at 9:00 pm ET eased thereafter. The aussie-loonie pair is currently trading at a 4-day low of 1.0423 with 1.040 seen as the next downside target level. The pair closed yesterday’s trading at 1.0448.
The Australian dollar jumped to an 11-day high of 87.27 against the yen in the Asian session. The next upside target level for the aussie is seen at 87.5. The aussie-yen pair was worth 86.56 at yesterday’s close.
Japan’s Ministry of Economy, Trade and Industry said early in the day that the nation’s industrial output rose 1.0 percent in April compared to the previous month, continuing to reflect the results of the devastating earthquake and tsunami on March 11.
The April figure missed expectations for a 2.2 percent increase following the 15.5 percent plunge in March – which was the largest monthly decline on record.
On an annual basis, output declined 14.0 percent – again shy of estimates for a 12.4 percent decline after shedding 13.1 percent in the previous month.
Meanwhile, the Ministry of Communications and Internal Affairs said that the unemployment rate in Japan came in at a seasonally adjusted 4.7 percent in April – in line with expectations and up slightly from 4.6 percent in March.
Investors now focus on Japan’s housing starts for April, which is due at 1:00 am ET.
In the European session, Switzerland’s first quarter GDP and UBS consumption indicator for April, German retail sales for April and unemployment rate for May, French PPI and consumer spending for April, Eurozone CPI estimate for May and the unemployment rate for April are slated for release.
At 9:00 am ET, the Bank of Canada is due to announce its interest rate decision. The central bank is widely expected to keep rates on hold at 1 percent.
Canada’s industrial product price for April, U.S. S&P/Case-Shiller home price index for March, results of the Institute of Supply Management-Chicago’s business survey for May and the Conference Board’s consumer confidence report for April are also expected to influence trading in the New York morning session.