Forex - Aussie reverses course and falls on housing finance, yen weaker

Investing.com - The Australian dollar reversed course in Asia Wednesday on weaker than expected data on housing finance, with the yen also easing on continued U.S. dollar strength.

AUD/USD traded at 0.7607, down.21%, while USD/JPY changed hands at 121.36, up 0.19%. EUR/USD held at 1.0688, down 0.07%.

In Australia, the March Westpac-MI Consumer Sentiment index fell 1.2% to 99.5, somewhat expected after the strong rise in February that took the index to the highest level in more than a year.

A weaker Australian dollar from a mid-2013 peak has helped the economy adjust to new sources of demand with growth expected to gradually pickup, a senior Reserve Bank official said earlier Wednesday.

Assistant Governor Christopher Kent told the National RSL Clubs Conference in Hobart that a record low cash rate of 2.25% and other measures should help rebalance economic growth away from the end of a mining boom.

"Very low level of interest rates is expected to sustain strong activity in the housing market and support household wealth" and provide support for household consumption," Kent said.

January housing finance data showed a drop of 3.5%, nore than the expected 2.0% month-on-month fall after a 2.7% rise the month before.

In Japan, January machinery orders and February CGPI data were released. Core machinery orders fell 1.7% month-on-month, compared to an expected drop of 4.1%. CPGI rose 0.5% year-on-year in February matching expectations.

Later, China reports January-February industrial output, investment and retail sales at 1330 local time (0530 GMT).

Investment growth is seen up 15% for February year-on-year, and industrial output rose 7.8% in the same month and period, while retail sales are expected to have gained 11.7%.

Overnight, the dollar remained broadly higher against a basket of other major currencies on Monday, trading at a 11-1/2 year peak as expectations for a near-term U.S. rate hike continued to lend broad support to the greenback.

The Federal Reserve is expected to begin raising interest rates around the middle of this year and investors were looking ahead to next week’s policy statement to see if it would drop its reference to being patient before raising rates.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.09% to 98.70.

The euro came under pressure after the European Central Bank started asset purchases on Monday, pushing euro area bond yields to new lows.

Concerns over the situation in Greece also weighed, as the eurogroup of finance ministers were holding a second day of talks in Brussels to discuss a reform package put forward by Greece as part of its bailout review.

Last month Athens reached a temporary agreement with its lenders to extend its bailout by four months, but the reform package must be signed off by creditors before it can access further financial aid.

Germany’s finance minister Wolfgang Schaeuble warned Tuesday that Greece must stop wasting time and start developing its reform package.