The Australian dollar strengthened against the other major currencies in the Asian session on Wednesday, as data showing a bigger than expected increase in domestic consumer prices reduced the possibility of Reserve Bank of Australia cutting rates in the upcoming meeting.
Data from the Australian Bureau of Statistics showed that the consumer prices in Australia were up 0.2 percent on quarter in the first quarter of 2015. That was unchanged from the previous quarter, although it was bigger than expectations for a 0.1 percent increase.
On a yearly basis, inflation advanced 1.3 percent – in line with forecasts and down from 1.7 percent in the previous three months.
In other economic news, data from Westpac Bank and the Melbourne Institute showed that the latest leading economic index of Australia’s economy is expected to slow through the remainder of this year, sliding 0.3 percent in March. That follows the 0.3 percent increase in February.
Tuesday, the Australian dollar was trading lower, as the minutes of RBA’s April 7 meeting and the comments of RBA Governor Glenn Steven late Monday signaled chances of a further rate cut in May’s meeting. However, the minutes showed that the bank is likely to wait for more economic data before deciding on further interest rate cut measures.
The Australian dollar fell 0.18 percent against the U.S. dollar, 0.23 percent against the yen, 0.15 percent against the euro and 0.31 percent against the NZ dollar on Tuesday.
In the Asian trading today, the Australian dollar rose to 2-day highs of 92.99 against the yen and 1.3798 against the euro, from yesterday’s closing quotes of 92.24 and 1.3915, respectively. The aussie may test resistance near 94.75 against the yen and 1.36 against the euro.
Against the U.S., the New Zealand and the Canadian dollars, the aussie advanced to 2-day highs of 0.7772, 1.0113 and 0.9535 from yesterday’s closing quotes of 0.7709, 1.0045 and 0.9462, respectively. If the aussie extends its uptrend, it is likely to find resistance around 0.79 against the greenback, 1.03 against the kiwi and 0.97 against the loonie.
Looking ahead, minutes of the Bank of England’s latest monetary policy meeting and Swiss ZEW economic expectation survey results for April are due to be released in the European session.
In the New York session, U.S. house price index for April, existing home sales for March and Eurozone consumer confidence index for April are slated for release.
At 1:00 pm ET, German Bundesbank board member Andreas Dombret is expected to speak on the current situation in the euro area in New York.
The material has been provided by InstaForex Company – www.instaforex.com