The Australian dollar touched a two-week high against the greenback as the market waits for a report tomorrow that shows inflation advanced, fuelling bets that interest rates may be hiked.
The Aussie also advanced against its 16 major peers. The Bloomberg Dollar Spot Index plunged as the market awaits data that show sales of new homes in U.S. fell. The Japanese yen also rose against dollar for the first time in over a week as reports filtered in the China’s biggest bad debt manager revealed that the nation’s bad-loan ration rose “significantly”
The Aussie rose 0.4 percent to trade at 93.63 U.S. cents as of 9:03 a.m. London time, its biggest gain since April 8. The euro remained slightly unchanged at $1.3803, while the yen gained 0.1 percent to trade at 102.49 a dollar and 141.47 euro.
“What we’ve heard from the Reserve Bank of Australia is that they remain fairly neutral for now but if prices start shooting through the roof, this might force their hand at some stage,” Stan Shamu, a Melbourne-based market strategist at IG Ltd told Bloomberg. “Perhaps that’s why the Aussie is pushing a bit higher in the short term.”
Economists predict the adjusted measure of consumer prices in Australia to advance 2.9 percent in the first quarter on a year-on-year basis. This is higher compared to the 2.6 percent recorded in the last three months ended December. The Australian Bureau of Statistics is expected to announce the actual data on Wednesday.
The Australian central bank currently targets a mean yearly inflation of between 2 percent and 3 percent. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
To contact the reporter of this story; Yashu Gola at email@example.com