The Australian dollar strengthened against a broadly weaker U.S. currency on Friday as month-end book balancing provided another excuse to sell the greenback. The Aussie had lost significant ground against the U.S. currency after softer than expected local consumer inflation data Wednesday dramatically lowered the odds of an RBA interest rate increase next week. Nevertheless, U.S. stocks climbed back into positive territory late Thursday giving Wall Street a shot a gaining on the day. Higher stocks tend to lift investor sentiment and spur demand for higher-yielding currencies such as the Aussie dollar. Despite the greenback’s decidedly heavier tone overnight, the U.S. unit gained against the kiwi dollar after the RBNZ yesterday hinted at a slower pace of tightening in the months ahead. The New Zealand central bank’s remarks accompanied its widely expected decision to boost its official cash rate by 25 basis points to 3.0%, its second hike in as many months. The euro soared to a three-month high against its U.S. rival, largely benefiting from positive euro zone data that contrasted a report showing still elevated U.S. claims for unemployment insurance in the latest week. Economic sentiment in the euro area shot to a 28-month peak in July, which continued a recent trend of upbeat indicators that spoke better about the euro zone economy. A data-rich economic calendar today features a raft of Japanese figures, New Zealand building consents and local private credit. Later Friday, market players will focus on U.S. and Canadian growth figures to gauge the pace of recovery underway in North America. |
