Thursday in Asia, the Australian dollar jumped to 3-day highs against its most major counterparts after a report showed that Australia's business investment increased more than expected in the second quarter of 2008. The aussie also strengthened to a 2-day high against the loonie.
The Australian Bureau of Statistics reported today that the nation's new private sector capital expenditure on buildings and equipment surged 5.7% in the second quarter, beating market expectations that called for an increase of 2.0% Capital expenditures were 8.1% higher than those in the second quarter of 2007. The Bureau said capital expenditure in the first quarter posted a revised 1.0% growth.
A separate report from the Conference Board said that the leading index for Australia declined for a fifth straight month in June, falling 0.5%. Meanwhile, the coincident index remained unchanged in June, after a 0.1% decrease in May. The report also stated "all in all, the current behavior of the composite indexes suggests that economic growth should slow further in the near term."
Investors anxiously await the Reserve Bank of Australia's interest rate decision, which has been scheduled for September 2. Fiancial markets fully expect the Reserve bank of Australia to cut its key cash rate by 25 basis points to 7.0 percent at its monthly policy meeting next week, the first easing in seven years.
During early deals on Thursday, the Aussie climbed to a 3-day high of 0.8689 against the US currency. This may be compared to yesterday's close of 0.8585. If the kiwi-greenback pair moves further higher, it may test resistance around the 0.882 level.
The US dollar has been weakening as the crude oil prices continued to rise. In the Asian session today, Brent crude for October settlement gained 28 cents to $116.50 a barrel by 10:51 p.m. ET. The contract closed up $1.59 at $116.22 a barrel on Wednesday on London's ICE Futures Europe exchange.
Crude oil settled higher for a third day Wednesday on fears about Tropical storm Gustav causing disruptions to oil installations in the Gulf of Mexico region. Miners including oil producers may gain on higher commodity prices.
The aussie-greenback pair has depreciated 14% from a 25-year peak of 0.9852 hit on July 15 to a touch an 11-month low of 0.8497 on August 26. However, the aussie reversed direction after hitting an 11-month low and since then the pair has gained 2%.
Against the euro, the aussie trended up in Asian trading on Thursday and the pair reached 1.7043 at 1:20 am ET. This set a 3-day high for the aussie. The next upside target level for the Australian currency is seen around 1.684. The euro-aussie pair was worth 1.7163 at Wednesday's close.
German consumer price inflation slowed to 3.1% annually in August from 3.3% in July, according to the preliminary results based on six Lander released by the Federal Statistical Office showed yesterday. Economists had expected the annual inflation to ease to 3.2% in August after reaching its highest level in almost fifteen years in July. On a monthly basis, consumer prices fell 0.3% in August, mainly due to relatively large price decreases for liquid fuel and motor fuels. Economists were expecting just 0.2% fall in August.
The aussie slumped to a 5 1/2 -month low of 1.7365 against the euro on August 13. The aussie then attempted to reverse direction but declined again on August 18 and touched a 13-day low of 1.7215 on August 26. Since then, the aussie has been in an upward channel against the euro.
The Aussie, which closed yesterday's trading at 94.04 against the yen rose to a 3-day high of 94.96 during early Asian deals on Thursday. On the upside, the aussie-yen pair is likely to target the 96.3 level.
The aussie reversed direction against the yen after hitting a 13-day low of 93.34 on August 26. Since then, the pair has appreciated around 2%.
In Asian trading on Thursday, the Australian dollar advanced to a 2-day high of 0.9070 against the Canadian dollar. If the aussie-loonie pair gains further, 0.93 is seen as the next target level. The pair that dropped to a 6 1/2 -month low of 0.8954 in New York morning trading yesterday bounced back in afternoon deals and closed the day's trading at 0.8987.
The New Zealand dollar also surged today and reached 3-day highs against the dollar and the yen. The Australian and New Zealand dollars tend to move in the same direction, as both are high-yielding currencies favored by investors for carry trade. The Reserve Bank of Australia's current benchmark interest rate stands at 7.25%, while that of New Zealand's official cash rate is 8.00%.
New Zealand Finance Minister Michael Cullen said today that rising commodity prices and tight global credit are combining to present serious challenges to the economy of New Zealand. In remarks to a business conference, Cullen said the nation faces its stiffest economic test in years.
"Today, New Zealand is facing a serious economic challenge generated by the global credit crunch and steep rises in global commodity prices," Cullen said in Auckland. "These are the most complex and challenging set of economic forces we have confronted in at least two decades.
Most economists believe New Zealand has entered an economic recession, with consumer and business spending both hit hard by high energy costs and tight credit, and drought conditions hurting exports.
The New Zealand kiwi that closed Wednesday's New York session at 0.7019 against the US dollar and 76.87 against the Japanese yen, climbed to 3-day highs of 0.7071 and 77.42, respectively during Thursday's early deals.
Against the Australian dollar, the kiwi weakened after hitting a 3-day high of 1.2220 by about 7:05 pm ET. Currently, the aussie-kiwi pair is worth 1.2295. The pair closed Wednesday's New York session at 1.2246.
Against the European single currency, the NZ dollar showed strength during Thursday's early deals. The kiwi that closed yesterday's trading at 2.0988 against the euro, hit as high as 2.0909 by about 9:40 pm ET.
The Reserve Bank of New Zealand reported today that M3, the broadest measure of monetary aggregate, increased at a faster pace of 7.6% year-on-year in July compared to 7.4% in June. However, money supply rose less than the 9.4% growth reported in the prior year.
Looking ahead, the Italian PPI, Euro-zone M3 money supply, business and confidence reports are due out in the upcoming European session.
Across the Atlantic, the US Q2 GDP and the initial jobless claims reports have been slated for release. Economists expect the GDP to show an annualized rise of 2.7% following a previous rise of 1.9%. Within the GDP report, markets are looking to see any change in inflation and will be paying attention to the GDP price index. The index is expected to rise by 1.1%, unchanged from the prior quarter.
Economists are forecasting initial jobless claims to come in at 425,000 claims for the week ending August 23, down from the previous week's claims of 432,000. Continuing claims for the week ending August 16 is forecast to grow to 3390K claims, up from the previous week's 3362 result.
In Canada, Statistics Canada will release the current account balance for Q2. The current account is forecast to grow to $8.0B, an increase of $2.4B from the prior quarter.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.