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Australian Dollar Advances As Building Permits Rise, Trade Deficit Falls

02:25, 2nd October 2014

(RTTNews) - The Australian dollar strengthened against the other major currencies in the Asian session Thursday after data showed that Australia's building approvals rose more-than-expected in August, while trade deficit narrowed in the same month

Data from Australian Bureau of Statistics showed that Australia had a merchandise trade deficit of A$787 million in August. That beat forecasts for a shortfall of A$800 million following the upwardly revised A$1,075 million deficit in July.

Separate report from the same agency showed that the total number of building approvals issued in Australia was up a seasonally adjusted 3.0 percent on month in August, coming in at 16,810. That beat forecasts for an increase of 1.0 percent following the 2.5 percent gain in July. On a yearly basis, building approvals climbed 14.5 percent - also topping expectations for 12.7 percent following the 9.4 percent jump in the previous month.

In the New York session overnight, the Australian dollar was slightly higher against most major currencies.

On Wednesday, the Australian dollar rose 0.94 percent against the yen, 0.04 percent against the greenback, 0.12 percent against the euro and 0.06 percent against the loonie.

The Australian dollar rose to a 10-day high of 1.4355 against the euro and a 6-day high of 0.8802 against the U.S. dollar in the Asian trading, from yesterday's closing quotes of 1.4438 and 0.8736, respectively. This may be compared to early lows of 1.4461 against the euro and 0.8717 against the greenback. If the aussie extends its uptrend, it is likely to find resistance around 1.42 against the euro and 0.89 against the greenback.

Moving away from an early 2-month low of 94.97 against the yen, the aussie recovered to 95.79. At yesterday's close, the aussie was trading at 95.13 against the yen. The aussie is likely to find resistance near the 97.06 region.

Data from the Bank of Japan showed that the monetary base in Japan surged 35.3 percent on year to 245.816 trillion yen in September, after soaring 40.5 percent in August. Banknotes in circulation added 3.5 percent on year, while coins in circulation collected an annual 0.9 percent - both unchanged from the previous month.

Against the Canadian dollar, the aussie edged up to 0.9783, from yesterday's closing quote of 0.9740. The aussie may test resistance near the 0.98 region.

Looking ahead, Eurozone producer price index for August is due to be released in the European session.

In the New York session, U.S. weekly jobless claims for the week ended September 27 and factory orders for August are due to be released.

The European Central bank will announce its interest rate decision at 7:45 am ET. Economists expect the bank to retain interest rates unchanged at 0.05 percent. At 8:30 am ET, ECB President Draghi will give press conference following interest rate announcement.

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