The Australian dollar strengthened against the other major currencies in the Asian session on Wednesday, as bigger than expected increase in fourth quarter inflation reduced odds of a rate cut in the near term.
Data from Australian Bureau of Statistics showed that the consumer prices in Australia climbed 0.4 percent on quarter in the fourth quarter of 2015. The was bigger than a 0.3 percent increase forecast by economists and followed a 0.5 percent gain in the third quarter.
On a yearly basis, inflation climbed to 1.7 percent, also slightly above forecasts for a 1.6 percent rate and up from 1.5 percent in the three months prior.
In other economic news, the latest survey from Westpac Bank and the Melbourne Institute showed that the Australian economy is expected to slowed, as its leading economic index for December fell 0.3 percent to continue suggesting below-trend growth. That follows the upwardly revised 0.2 percent decline in November.
Meanwhile, Asian stock markets are mostly higher, tracking the overnight gains on Wall Street as positive economic data, strong corporate earnings and a surge in the price of crude oil lifted investor sentiment. Bucking the trend, the Chinese and Australian markets are in negative territory.
Tuesday, the Australian dollar fell against its major rivals as the price of oil reversed course. Investors also remained cautious ahead of monetary policy statements from the U.S. Federal Reserve and the Bank of Japan, due on Wednesday and Friday, respectively.
The Australian dollar fell 0.71 percent against the U.S. dollar, 0.82 percent against the yen, 0.56 percent against the euro and 0.51 percent against the Canadian dollar. Meanwhile, the Australian dollar held steady against the NZ dollar.
In the Asian trading, the Australian dollar rose to a 7-week high of 1.0847 against the NZ dollar, from an early 2-day low of 1.0749. The aussie may test resistance around the 1.10 area.
The aussie advanced to a 5-day high of 0.7041 against the U.S. dollar, from yesterday’s closing value of 0.7004. On the upside, 0.72 is seen as the next resistance level for the aussie.
Against the yen and the euro, the aussie climbed to 2-day highs of 83.35 and 1.5410 from yesterday’s closing quotes of 82.94 and 1.5513, respectively. If the aussie extends its uptrend, it is likely to find resistance around 86.00 against the yen and 1.49 against the euro.
The aussie edged up to 0.9939 against the Canadian dollar, from yesterday’s closing value of 0.9886. The next possible upside target level for the aussie is seen around the 1.00 region.
Looking ahead, the German Gfk consumer confidence index for February, Swiss UBS consumption indicator for December and U.K. nationwide house price index for January are due to be released in the pre-European session at 2:00 am ET.
At 4:25 am ET, Bank of England’s Deputy Governor for Prudential Regulation Andrew Bailey will give opening keynote address at the Financial Times European Financial Forum: Building the Future of European Financial Services in Dublin.
U.K. BBA mortgage approvals data for December is set to be released at 4:30 am ET.
At 6:00 am ET, European Central Bank Board member Yves Mersch is expected to speak at Sparkassen Advisory Board organised by Bayerische Landesbank in Munich.
In the New York session, U.S. new home sales data for December and weekly U.S. crude oil inventories data are slated for release.
At 8:00 am ET, European Central Bank Executive Board member Sabine Lautenschlaeger will deliver a speech at Workshop of the European Banking Institute (EBI) hosted by the European Central Bank in Frankfurt.
Subsequently, at 11:30 am ET, Bank of England Deputy Governor Minouche Shafik will speak at the Bank of England to payments industry stakeholders in London.
At 2:00 pm ET, the Federal Reserve will announce its decision on monetary policy. The Fed is expected to hold rates at 0.25-0.50 percent.
The material has been provided by InstaForex Company – www.instaforex.com