The dollar rose against most major currencies in Wednesday’s Asian session on reduced risk aversion. Strong German exports data on Tuesday, which hit record levels in July, boosted risk appetite, while lower-than-expected imports in China in August raised hopes that Chinese authorities would announce further stimulus measures to boost domestic demand.
The improved sentiment lifted US and European stocks on Tuesday. The S&P 500 closed 2.5% higher, helping Tokyo stocks to records their biggest one-day gain since 2008 on Wednesday. The Nikkei 225 Index closed 7.7% higher, while shares in China moved higher for a second day, with the main indices up by over 1% in late Asian trading.
One of the big gainers this week has been the Australian dollar. The aussie has rallied almost 2% against the US dollar since Tuesday, moving away from Friday’s new six-year low. The Westpac Consumer Confidence Surveys out earlier today had no impact on the Australian dollar. RBA’s Deputy Governor Philip Lowe gave no hints of any further rates at a speech in Melbourne. This further supported the aussie, which was up at 0.7050 against the dollar in late Asian session.
The New Zealand dollar has also been rallying and was up at 0.6372 against the greenback. The kiwi will likely come under pressure tomorrow when the Reserve Bank of New Zealand is expected to cut rates to 2.75%. The statement that will follow the decision will be closely scrutinized for clues on any future cuts in interest rates.
The Canadian dollar was firmer as oil prices appeared to stabilize despite ongoing concerns of over production. US oil futures were slightly down at $45.92 in late Asian session. The greenback fell to 1.3205 against the loonie as markets await the outcome of the Bank of Canada’s rate decision later today.
Meanwhile, the dollar held above 120 yen in late Asian trading, rising to 120.55 yen. The euro touched a low of 1.1146 dollars before rebounding slightly to 1.1162 dollars. Against the pound, the euro drifted lower to 0.7257 but rose to 134.55 against the yen. The pound was steadier against the dollar but was unable to hold above the 1.54 level as it edged down to 1.5379 dollars.
Coming up later in the day, UK industrial and manufacturing figures for July will be closely watched as recent data had pointed to a weakening outlook. The Bank of Canada is expected to leave rates unchanged at 0.5% when it meets later today and south of the border, the JOLTS job openings for July will be the main data coming out of the US.