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Monday in Asia, the Australian and the New Zealand dollars surged up against their key counterparts as gains by most Asian stocks boosted demand for higher-yielding currencies.
Asian stocks rose as the financial officials from the Group of 20 industrialized and emerging market economies pledged to maintain economic stimulus measures until recovery from the global crisis is assured and asked the IMF to assess whether countries were on track for delivering strong, sustainable, and balanced growth to avoid future problems.
"Economic and financial conditions have improved following our coordinated response to the crisis," the G-20 officials said in a statement. "However, the recovery is uneven and remains dependent on policy support, and high unemployment is a major concern. To restore the global economic and financial system to health, we agree to maintain support for the recovery until it is assured."
G-20 finance ministers and central bankers, gathered in the Scottish town of St. Andrews on November 6-7, committed to a timetable for a new system of keeping an eye on each others' economies, under which countries would present national and regional plans by the end of January to support sustainable recovery and job creation.
Japan's Nikkei 225 index climbed 0.3%, Australia's benchmark S&P/ASX 200 index gained 1.5%, New Zealand's NZX-50 index rose 0.2%, South Korea's Kospi jumped 0.7% and Hong Kong's Hang Seng edged up 1.1%.
Benchmark interest rates are 0.1 percent in Japan and as low as zero in the U.S., compared with 3.5 percent in Australia and 2.5 percent in New Zealand, making the yen and dollar favored targets for investors seeking to fund carry trades.
The Australian Bureau of Statistics said today that the number of loans granted to build or buy houses and apartments climbed 5.1 percent to 65,505 from August, when they fell a revised 1.9 percent. That was higher than analysts' expectations for a 3 percent gain.
The Aussie, which closed last week's trading at 0.9176 against the U.S. currency rose to a 2-week high of 0.9275 in Asian deals on Monday. The next upside target level for the aussie-greenback pair is seen at 0.933.
The U.S. currency dropped as the International Monetary Fund signaled that record low U.S. interest rates are funding global "carry trades" and the dollar is still overvalued as concerns mount that new financial imbalances are forming.
"There are indications that the U.S. dollar is now serving as the funding currency for carry trades," the IMF said in a report published on November 7.
Speculation that the Fed will keep rates on hold into next year was further fueled by U.S. Labor Department figures on November 6 that showed the nation's unemployment rate jumped to 10.2 percent in October, exceeding 10 percent for the first time since 1983.
The aussie-greenback pair has gained 4% after it touched a 4-week low of 0.8909 on November 02.
During Asian deals on Monday, the Australian dollar climbed to a 10-day high of 83.58 against the Japanese yen. This may be compared to Friday's close of 82.55. If the Australian currency strengthens further, it may target the 84.1 level.
The aussie-yen pair that plunged to more than a 3-week low of 79.51 on November 02 recovered thereafter as the Australian government raised its economic growth outlook for 2009 and 2010 fiscal years from its earlier forecasts in May.
Adding to the Aussie's uptrend, the Reserve Bank of Australia hiked the nation's cash rate by 25 basis points on November 03 for the second straight month to 3.5% as economic conditions were stronger than expected and confidence had recovered.
Thus far, the aussie-yen pair has appreciated 5% from a 3-week low.
Against the currency of Europe, the Aussie soared to near a 3-week high of 1.6092 in Asian deals on Monday. If the Australian currency gains further, it may target a new multi-month high of 1.593. At last week's close, the euro-aussie pair was quoted at 1.6189.
The Australian dollar reached a 16-month high of 1.6087 against the euro on October 20. That was up 24% from a new multi-year low of 2.1142 hit in October 2008.
In Asian deals on Monday, the Aussie jumped to near a 5- 1/2 -year high of 0.9922 against the Canadian dollar. If the aussie-loonie pair edges up further, it may reach the parity rate. The pair closed last week's trading at 0.9858.
The Australian dollar has soared 14% against the loonie thus far this year.
The New Zealand dollar surged up today as the Fonterra Cooperative Group Ltd., the world's biggest dairy exporter, raised its payout forecast for 2009/10 by 95 cents to NZ$6.05 per kilogram of milksolids. Fonterra had lifted its forecast to NZ$5.10 per kgMS on September 22.
Earlier today, Quotable Value announced that New Zealand's house prices rose 0.2% year-on-year in October, rebounding from the 1.1% decline in the previous month.
The New Zealand dollar that closed last week's trading at 2.0476 against the euro soared to an 11-day high of 2.0216 in Asian deals on Monday. On the upside, 2.015 is seen as the next target level for the kiwi.
During Asian deals on Monday, the New Zealand dollar strengthened to a 12-day high of 0.7390 against the US currency and a 10-day high of 66.59 against the yen. The next upside target level for the kiwi is seen at 0.764 against the greenback and 67.4 against the yen. The kiwi-greenback and the kiwi-yen pairs were worth 0.7256 and 65.28, respectively at Friday's close.
The NZ dollar jumped to a 5-day high of 1.2540 against the Aussie in Asian trading on Monday. The next upside target level for the kiwi is seen at 1.250. At last week's close, the aussie-kiwi pair was quoted at 1.2659.
Traders are now likely to focus on the European session, in which the German trade balance and industrial production for September and the Euro-zone Sentix investor confidence report for November are expected.
From Canada, the housing starts report for October is due at 8:15 am ET.
There are no significant economic reports due to be released from the U.S. today.
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