| /23/2008
2:27 PM: EUR/$..1.5891 $/JPY..103.46 GBP/$..1.9800
$/CHF..1.0163 AUD/$..0.9490 $/CAD..1.0165
Aussie Spikes on Inflation
The greenback recovered against the euro following
recent sessions at record lows near the 1.60-level,
but plunged to a fresh 24-year low versus the
Australian dollar at 0.9540. Amid a dearth of
US economic reports, traders focused on global
central banks’ policy outlooks.
The US economic calendar picks up in the Thursday
session with the release of March durable goods
orders, weekly jobless claims and March new home
sales. The headline durable goods orders report
is seen flat in March, versus a 1.1% drop in February.
The ex-transports durable goods orders are expected
to improve to 0.4%, reversing the 2.4% decline
a month earlier. Weekly jobless claims are largely
unchanged, up slightly to 375k from 372k in the
prior week. Meanwhile, March new home sales are
expected to slip to 580k, versus 590k from February.
The euro eased off its all-time highs above the
1.60-level following comments from Luxemburg Finance
Minister Juncker, who expressed unease about the
euro’s strength and its potential to be
detrimental to Eurozone growth. However, Germany’s
Economy Minister Glos offered a contrasting view,
saying “Germany’s economy is coping
well so far” and was not hurt by the strengthening
euro
Aussie Rallies on Inflation
The Australian dollar surged to its highest level
in 24-years against its American namesake, breaching
the 0.95-level to 0.9540. The catalyst for the
move higher was a report revealing a spike in
Australia’s core inflation, which posted
its largest quarterly gain in 17-years. The Q1
consumer price index beat out expectations, gaining
1.3% q/q and 4.2% y/y. The sharp increase in inflation
fuelled fears that the Reserve Bank of Australia
will maintain its hawkish bias. We continue to
expect another 25-basis point rate hike from the
RBA to 7.50% by year end, while remaining on hold
for the first half of 2009.
The Aussie continues to benefit from tempered
expectations for an RBA rate cut in the near-term,
climbing past the 0.95-mark. Interim resistance
is seen at 0.9540, followed by 0.9575 and 0.96.
Subsequent ceilings are seen at 0.9630, followed
by 0.9660 and our near-term price target of 0.97.
Support is seen at 0.9470, backed by 0.9440 and
0.94. Additional floors are eyed at 0.9350, followed
by 0.93 and 0.9240.
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