The Australian dollar rallied against its major opponents on Monday morning in Asia as the Reserve Bank of Australia Governor Glenn Stevens said house prices are “getting quite high” and signaled that interest rates may need to be increased further to contain inflation.
Interest rate in Australia is currently staying at 4.0 percent and analysts expect the RBA to increase the rate by 25 basis points to 4.25 percent in its next policy meeting on April 6.
On the equity front, the Australian market has shed most of its earlier gains with investors pressing some sales following a subdued close on Wall Street last Friday.
The benchmark S&P/ASX 200 index, which declined to around 4,891 from a high of 4,912, is currently trading at 4,895, down 1.9 points from its previous close. The broader All Ordinaries index is down 2.2 points at 4,903, nearly 20 points down from the day’s high.
Among other markets in the Asia-Pacific region, Malaysia, Japan and South Korea are trading weak, while New Zealand, Singapore and Taiwan are up with modest gains.
In economic news, new home sales in Australia fell 5.2% month-on-month in February as interest rates rose and the impact from the first home owner boost continued to wane, the Housing Industry Association (HIA) said today. This follows a sharp 9.5% increase in prices in January.
The Australian dollar advanced to 0.9071 against the US dollar and 84.10 against the Japanese yen around 10:20 pm ET Sunday from Friday’s closing values of 0.9034 and 83.59, respectively. In near-term, the aussie may find resistance levels at 84.25 against the yen and 0.9090 versus the greenback.
Retail sales in Japan were up 4.2 percent on year in February, the Ministry of Economy, Trade and Industry said today. That was sharply higher than analyst expectations for a 1.6 percent increase following the revised 2.3 percent annual gain in January.
Overall retail sales were up 0.9 percent on a seasonally adjusted monthly basis, compared to forecasts that had called for a 1.2 percent decline after the revised 2.0 percent fall a month earlier.
The Australian dollar that slumped to a 12-day low of 1.4920 against the euro earlier in the session recovered some of its losses shortly. As of 10:30 pm ET Sunday, the aussie inched higher to 1.4813 against the euro and this may be compared to last week’s closing quote of 1.4855. The euro-aussie pair is presently trading at 1.4814.
The Australian dollar edged higher to 1.2874 against the NZ dollar before shedding some gains around 8:15 pm ET Sunday. The aussie-kiwi pair that was worth 1.2841 at Friday’s close is currently quoted at 1.2850.
Friday. The aussie-loonie pair is presently worth 0.9306 with 0.9325 seen as the next target level in near-term.
Looking ahead, the euro-zone final figures of March consumer confidence is slated for release in the upcoming European session.
From the U.S., personal income and spending reports for February are expected in the New York session.