Australian Dollar Rises On RBA Deputy Gov. Lowe Comments
March 05 2015 - 12:26AM
RTTF2
The Australian dollar strengthened against the other major
currencies in the Asian session on Thursday, as sentiment was
bolstered by Reserve Bank of Australia Deputy governor Philip
Lowe's comments in Sydney.
In a speech in Sydney, Lowe said that the interest rate cut is
less effective in spurring the economy than in the past, but it led
to weakened exchange rate and encouraged housing construction.
Talking about the effects of the monetary policy easing, he said
that despite the transmission mechanism looking somewhat different,
monetary policy in Australia is still working and it is helping to
support the economy.
Lower interest rates attracted capital inflows and kept the
Australian dollar elevated, he added.
"While movements in the value of our own currency remain heavily
influenced by changes in commodity prices, the upward pressure on
the Australian dollar from developments abroad has complicated the
transition of the economy following the mining investment boom, "
he said.
In other economic news, data from the Australian Bureau of
Statistics showed that Australia posted a merchandise trade deficit
of A$980 million in January. The headline figure was wider than the
shortfall of A$925 million expected by economists.
Exports were up A$343 million or 1.0 percent on month to
A$27.529 billion. Imports gained A$820 million or 3.0 percent to
A$28.509 billion.
Also, data from the ABS showed that the total value of retail
sales in Australia was up a seasonally adjusted 0.4 percent on
month in January, standing at A$23.880 billion. That was in line
with expectations following the 0.2 percent increase in
December.
Traders await the European Central Bank meeting, which will be
held in Cyprus later today. The ECB is expected to provide details
on its quantitative easing measures.
Wednesday, the Australian dollar rose 0.20 percent against the
U.S. dollar, 0.14 percent against the yen and 0.88 percent against
the euro and 0.16 percent against the Canadian dollar.
In the Asian trading today, the Australian dollar rose to 1.4126
against the euro for the first time since January 28. At
yesterday's close, the aussie was trading at 1.4168 against the
euro. The aussie may test resistance near the 1.39 region.
The aussie advanced to a 2-day high of 1.0361 against the NZ
dollar, from an early record low of 1.0282. The aussie is likely to
find resistance around the 1.05 area.
Against the U.S. and the Canadian dollars, the aussie edged up
to 0.7839 and 0.9739 from yesterday's closing quotes of 0.7816 and
0.9700, respectively. If the aussie extends its uptrend, it is
likely to find resistance around 0.81 against the greenback and
0.99 against the loonie.
Against the yen, the aussie edged up to 93.88 from yesterday's
closing value of 93.54. On the upside, 97.48 is seen as the next
resistance level for the aussie.
Looking ahead, the German factory orders for January is due to
be released at 2:00 am ET.
In the European session, Markit's Germany construction PMI,
Eurozone retail PMI and U.K. Halifax house price index - all for
February are set to be published.
The Bank of England will announce its interest rate decision at
7:00 am ET. Economists expect the bank to retain interest rates
unchanged at 0.50 percent and asset purchase target at GBP 375
billion.
The European Central Bank will announce its interest rate
decision at 7:45 am ET. Economists expect the bank to retain
interest rates unchanged at 0.05 percent.
Following the announcement, central bank President Mario Draghi
will hold the customary post-meeting press conference in Cyprus at
8:30 am ET.
In the New York session, U.S. weekly jobless claims for the week
ended February 28, factory orders for January and Canada Ivey's PMI
for February are slated for release.
At 10:00 am ET, U.S. Federal Reserve Bank of San Francisco
President John Williams will deliver a speech about the economic
outlook at the Chartered Financial Analysts Society Hawaii 10th
Annual Economic Forecast Dinner, in Honolulu.
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