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The Aussie that rose against its major counterparts in early Wednesday Asian deals amid an upbeat Australian consumer confidence data, pared gains after a government report showed that the nation's retail sales unexpectedly declined in July.
The Aussie thus eased from a new 1-year high against the U.S. currency and a new multi-week high against the yen. Meanwhile, the aussie plunged to a 5-day low against the euro.
Retail sales in Australia unexpectedly fell in July for a second month as consumers spent less on food and household goods, the Australian Bureau of Statistics announced today. Retail trade dropped a seasonally adjusted 1% month-on-month in July, which is faster than the 0.8% drop in June. Economists were looking for 0.5% growth.
The total retail turnover amounted to A$19.62 billion in July compared to the A$19.82 billion turnover witnessed in the previous month.
The bureau also revealed that approvals for housing finance in July fell a seasonally adjusted 2% from the previous month, exceeding economists' expectations of a 1% decline. The monthly fall in housing finance commitments was the first recorded since the 0.9% drop witnessed in September 2008. In June, approvals for housing finance were up 0.4% month-on-month.
The Aussie soared in early Asian deals today amid a report showed that the consumer sentiment in Australia climbed to its highest level in 13 months in September. The consumer sentiment index published by Westpac Bank and the Melbourne Institute increased 5.2 percent in September compared to August
Westpac Chief Economist Bill Evans noted the index has risen 34.4 percent in the last four months, the biggest four-month increase since the index began publication 35 years ago.
Today's report may give central bank Governor Glenn Stevens scope to keep interest rates unchanged at a half-century low in coming months after a report last week showed the economy expanded at the fastest pace in more than a year. Stevens has signaled he is monitoring retail sales to gauge whether demand will slow as the impact of A$20 billion ($17 billion) in government cash handouts to households wanes.
The central bank has slashed the overnight cash rate target by a record 4.25 percentage points since the collapse of Lehman Brothers Holdings Inc. a year ago.
Australia's economy has been "stronger than expected," Governor Stevens said on September 1, when he kept the benchmark interest rate at 3 percent for a fifth month. "The likelihood of inflation being persistently below" the bank's target range of between 2 percent and 3 percent "now looks low," he said.
At 9:05 pm ET Tuesday, the Aussie reached a new 1-year high of 0.8663 against the U.S. currency, up 31% from a 5 1/2 -year low of 0.6012 hit in October 2008.
However, amid a disappointing retail sales report, the aussie dropped thereafter and it is currently trading at 0.8589 against the greenback. If the aussie weakens further, it may likely target the 0.853 level. At yesterday's New York session close, the aussie-greenback pair was quoted at 0.8618.
The Aussie slipped against the Japanese yen after reaching a new multi-week high of 80.04 at 9:05 pm ET Tuesday. As of now, the aussie-yen pair is worth 79.25, down from yesterday's close of 79.59. The near term support for the Australian currency is seen at 77.1.
The Aussie plunged to a 5-day low of 1.6881 against the euro during Asian deals on Wednesday. The next downside target level for the aussie is seen at 1.695. The euro-aussie pair was worth 1.6813 at yesterday's close.
The Aussie surged up to a 13-month high of 1.6721 against the euro earlier this week as investors risk appetite boosted higher-yielding currencies amid a better than expected U.S. employment report.
But the aussie plunged yesterday as the euro rebounded on German trade balance report, which showed an unexpected increase in July. The aussie has lost 1% against the euro from a 13-month high.
During Asian deals on Wednesday, the Aussie tumbled to 1.2349 against the New Zealand dollar. If the aussie-kiwi pair declines further, it may likely target the 1.231 level.
A decline in most Asian stocks also exerted downward pressure on the Aussie.
Despite a positive close on Wall Street overnight, Asian markets are trading weak today with participants treading a cautious path ahead of crucial economic reports and expiry of futures and options contracts. While some markets in the region faltered after a good start, some others are seen struggling to make a headway into positive territory despite paring early losses.
In the Australian market, energy and materials stocks rallied sharply and lifted the benchmark indices up in early trades this morning. However, with investors choosing to take profits at higher levels, stocks have given up most of their gains now. A somewhat disappointing report on the home loans front has contributed to the slide to an extent.
The benchmark S&P/ASX 200 index, which rose to 4,554.7 in early trades, is currently trading at 4,522, down 1.8 points from its previous close. The broader All Ordinaries index is trading 0.7 points up at 4,528.5.
The Aussie that jumped to a 1-month high of 1.2433 against the kiwi in New York morning deals yesterday pared its gains in the afternoon trading and closed the day's deals at 1.2390.
The Aussie, which closed yesterday's trading at 0.9296 against the Canadian dollar fell to 0.9259 in Asian deals on Wednesday. The near term support for the aussie-loonie pair is seen at 0.920.
After hitting a 10-week high of 0.9333 against the loonie yesterday, the aussie has depreciated 1% thus far.
Looking ahead, the German final CPI report for August is expected at 2:00 am ET.
Chicago Federal Reserve Bank President Charles Evans, a FOMC voting member, is due to speak at 8 am ET.
At 8:15 am ET, the Canadian housing starts report for August has been slated for release.
The Federal Reserve is due to release its Beige Book, which is a compilation of anecdotal evidence on economic conditions from each of the 12 Federal Reserve districts, at 2 pm ET. The report is normally released about two weeks before the monetary policy meeting is held.
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