Australian Dollar Drops To 4-day Low Against Greenback And Yen
The Australian dollar declined against its major opponents on Monday morning in Asia as a decline in local stocks reduced demand for the currency. The Australian dollar fell to a 4-day low against the US dollar and Japanese yen.
The Australian stock market was trading in negative territory today following the mixed cues from Wall Street on Friday. In early morning trades, the benchmark S&P/ASX 200 Index was losing 18.50 points or 0.47% to 3,885.30 and the broader All Ordinaries Index was down 15.70 points or 0.40% to 3,883.80.
Retreating from Friday’s weekly high of 0.8090, the Australian dollar dropped to a 4-day low of 0.8014 against the US dollar in early Asian deals on Monday. The next downside target for the pair is seen at the 0.792 level. The aussie-buck pair is presently trading at 0.8019, compared to 0.8069 hit late New York Friday.
The greenback gained ground as China’s central bank Governor Zhou Xiaochuan said yesterday that the nation’s “foreign exchange reserve policy is always quite stable.
On Friday, China reiterated its call for a new global reserve currency to replace the U.S. dollar that triggered a fall in the greenback. In its Financial Stability Review for 2008, the People’s Bank of China said there is a need to create an international reserve currency with a stable value in the long term to avoid the shortcomings of sovereign currencies for maintaining reserves.
The Chinese central bank said it would push for the reform of international currency system for laying a solid foundation for global financial stability. Further, the Peoples Bank of China called for reduced dependence on the existing reserve currencies dominated by the U.S. dollar, saying that excessive reliance on them have added to the extent of risks and crises.
The Australian dollar also slumped to a 4-day low of 76.47 against the Japanese yen by 9:35 pm ET and the pair is presently trading at 76.6. On the downside, the Australian dollar may likely find support around the 76.2 level. The aussie-yen pair, which closed last week’s trading at 76.86, is presently quoted at 76.61.
The yen strengthened after a government report showed that the preliminary industrial output in Japan jumped 5.9 percent in May compared to the previous month. That was lower than analyst expectations for a 6.9 percent increase following the 5.9 percent gain in April. On an annual basis, output fell 29.5 percent versus forecasts for a 28.3 percent contraction after the 30.7 percent decline in the previous month.
At the same time, retail sales in Japan eased 2.8 percent on year in May, the Ministry of Economy, Trade and Industry said today, falling for the ninth consecutive month. That compares to forecasts for a 2.6 percent annual decline following the 2.8 percent contraction in April. On a monthly basis, retail sales were flat, in line with forecasts after the 0.6 percent increase in the previous month.
The Australian dollar also drifted lower to 1.7502 against the common currency of Europe by 9:35 pm ET. This may be compared to last week’s close of 1.7446. In near-term, 1.7515 seen as the next target level for the Australian currency.
The euro-zone economic, consumer, service and industrial confidence reports-all for the month of June are due out in the upcoming European session.
Pulling back from last week’s new multi-month high of 0.9321, the Australian currency weakened to 0.9265 against the Canadian dollar before leveling off around 9:35 pm ET Sunday. The aussie-loonie pair that closed Friday’s deals near 0.93 is presently worth 0.9277.
The Australian dollar also slipped back to 1.2455 against the New Zealand dollar by 9:35 pm ET, from Friday’s 4-day high of 1.2554. The aussie-kiwi pair, which closed last week’s trading at 1.251, is presently quoted at 1.2477.
New Zealand posted a trade surplus of 858.0 billion New Zealand dollars in May, Statistics New Zealand said today, the largest surplus in 16 years. Analysts had been expecting a surplus of 250 million NZD following the revised 319 million NZD surplus in April. For the year, New Zealand has a trade deficit of 3.044 billion NZD.
Exports came in at 3.96 billion NZD versus expectations for 3.70 billion NZD. Imports totaled 3.10 billion NZD - below forecasts for 3.42 billion NZD.
