SYDNEY: The Australian dollar strengthened against the other major currencies in the Asian session on Monday amid rising risk appetite, as China’s surprise decision to cut its key interest rate and upbeat earnings results from US technology companies boosted investor sentiment.
The People’s Bank of China cut both the one-year lending rate and the deposit rate by a quarter-point, marking the sixth rate cut since last November. Following Thursday’s comments from European Central Bank President Mario Draghi, the news added to optimism the global central banks will provide further stimulus.
Last Friday, the Australian dollar rose against its major rivals amid the PBoC rate cut and the European Central Bank’s indication a day ahead that further stimulus is likely in December. The Australian dollar rose 0.78% against the US dollar, 1.07% against the yen, 0.94% against the euro and 0.48% against the Canadian dollar.
In the Asian trading, the Australian dollar rose to nearly a 2-week high of 0.9555 against the Canadian dollar and more than a 2-month high of 1.5189, from Friday’s closing values of 0.9492 and 1.5258, respectively. On the upside, 0.97 against the Canadian dollar and 1.49 against the euro are seen as the next resistance level for the aussie.
The aussie advanced to 87.99 against the yen, from last week’s closing value of 87.63. If the aussie extends its uptrend, it is likely to find resistance around the 91.00 area.
Against the US and the New Zealand dollars, the aussie edged up to 0.7264 and 1.0715 from last week’s closing quotes of 0.7211 and 1.0674, respectively. The aussie may test resistance around 0.74 against the greenback and 1.09 against the kiwi.
Looking ahead, the German IFO business climate index for October and the BBA’s UK mortgage approvals data for September are due to be released later in the day.
At 6:45 am ET, European Central Bank board member Yves Mersch is expected to speak at the Belgian Financial Forum on “The Challenges of Innovation” in an event organized by the National Bank of Belgium in Brussels.
