Forex - Aussie weakens despite upbeat Westpac consumer survey, yen down

Investing.com - The Australian dollar eased in Asia on Wednesday after a consumer sentiment survey showed a sharp jump higher and the Japanese yen weakened as the market digested first quarter growth figures came in better than expected.

Australia's Westpac Consumer Sentiment for May jumped 6.4% to 102.4, the highest since January 2014.

Westpac chief economist Bill Evans said the minutes from the RBA's May meeting show it is relying on a continuing boost to household expenditure to encourage businesses to invest and employ - setting the economy on a path of a falling unemployment rate and above-trend growth in 2016.

"Such a scenario would be consistent with an extended period of steady interest rates," Evans said.

"The results from this survey will certainly provide some encouragement for the bank that households might continue to lift the pace of expenditure growth. Our view, for now, is that the most likely scenario is for an extended period of steady rates whilst recognizing that conditions in the labor market remain fragile and this latest boost to confidence will need to be sustained."

USD/JPY changed hands at 120.82, up 0.10%, while AUD/USD traded at 0.7907, down 0.09% and EUR/USD was quoted at 1.1130, down 0.19%.

In Japan first quarter GDP rose 0.6% for an annualized pace of 2.4%, outstripping expectations of an 0.4% gain quarter-on-quarter and for a year-on-year pace of 1.5%.

Economists expect GDP to continue growing in the second quarter. The average economist forecast for second quarter GDP is an annualized 2.26%, according to the latest monthly ESP Survey of 40 economists by the Japan Center for Economic Research conducted from April 28 to May 7.

However, Economic and Fiscal Policy Minister Akira Amari said after the release that weakness in the global economy remained a threat to sustained growth.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was quoted at 95.54, up 0.18%.

Overnight, the dollar extended gains against a basket of other major currencies on Tuesday, as data showing that U.S. building permits and housing starts soared past expectations last month continued to support.

The dollar was boosted after the U.S. Commerce Department said that the number of building permits issued last month increased by 10.1% last month to 1.143 million units from March's total of 1.038 million.

Analysts expected building permits to rise by 2.2% to 1.060 million units in March.

The report also showed that U.S. housing starts soared by 20.2% in April to hit 1.135 million units from March's total of 944,000 units, easily surpassing expectations for an increase of 9.9% to 1.019 million.

A senior European Central Bank policymaker Benoit Coeure said the central bank is planning to speed up the pace of its bond-buying stimulus program before the summer in order to avoid the "notably lower market liquidity" in late July and August.

Fears over the prospects of a Greek default also continued to pressure the single currency, even after the country’s labor minister said Tuesday that an agreement with its lenders on a cash-for-reforms deal would soon be reached.