The Australian and New Zealand dollars that eased against some major currencies in early Asian deals on Friday spiked higher after European Union leaders surprised investors with much-needed plans to ease worries over the region's debt problems.
European Union President Herman Van Rompuy said that the leaders have agreed to use the continent's permanent bailout fund to recapitalize struggling banks and agreed to the idea of a tighter union in the long term.
EU President said that banks can be recapped directly with aid funds, calling it a "breakthrough". He also noted that the leaders agreed to a joint banking supervisory body.
Meanwhile, the Eurozone finance ministers said that they will use the rescue funds "in a flexible and efficient manner" to ensure the financial stability of the euro area.
They welcomed the European Central Bank's decision to serve as an agent to the European Financial Stability Facility and later to the European Stability Mechanism, when it comes into force, in conducting market operations.
The European Union leaders, who began their 2-day summit in Brussels on Thursday pledged to inject 120 billion-euro, or $149 billion, package to promote growth in the debt-stricken eurozone as well as across the broader 27-nation European Union.
The growth package includes a 10 billion euro capital boost for the European Investment Bank. It also redirects 60 billion euros of unused structural funds to help small enterprises and create youth employment in most needy countries.
The Australian dollar that ended yesterday's trading at 1.0046 against the US dollar rose to an 8-day high of 1.0173. The next upside target level for the aussie-greenback pair is seen at 1.020.
The Australian dollar climbed to a fresh 3-month high of 1.0460 against the Canadian dollar and a 4-day high of 80.77 against the yen, compared to yesterday's close of 1.0385 and 79.84, respectively. If the aussie gains further, it may likely target 1.050 against the loonie and 81.0 against the yen.
Against the New Zealand dollar, the Australian dollar jumped to an 8-day high of 1.2786 from Thursday's closing value of 1.2748. On the upside, 1.282 is seen as the next target level for the aussie.
The Australian dollar recovered against the euro after hitting a 3-day low of 1.2445 at 11 pm ET. As of now, the pair is trading near yesterday's close of 1.2393. The near term resistance level for the aussie is seen at 1.237.
The New Zealand dollar also strengthened, hitting as high as 0.7964 against the US dollar and 63.23 against the yen. The next upside target level for the aussie is seen at 0.80 against the greenback and 63.6 against the yen. The kiwi-greenback and the kiwi-yen pairs were worth 0.7884 and 62.66, respectively at yesterday's close.
Investors now focus on the European session, in which French GDP for the first quarter, Swiss KOF leading indicator for June, Eurozone M3 money supply for May and the inflation estimate for June, U.K. services index for April are slated for release.
The U.S. and Canadian GDP data, Canada's industrial product prices and raw materials price indexes -all for May, the Chicago PMI and the University of Michigan's final consumer confidence report-both for June are expected in the New York session.
by RTT Staff Writer
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