Australian Dollar Touches 5-Month High - 2.2.2012

US Dollar The dollar lost ground yesterday against the major counterparts as investors boosted demand for higher-yielding assets after reports from Europe, from the US and China showed manufacturing grew in January, boosting confidence the global economy is recovering. The Institute for Supply Management reported its manufacturing index rose in January to 54.1 from 53.1 in December, while construction spending increased by 1.5% in December, showing the biggest gain in the previous several months. The dollar index dived to the lowest level since December 9 – 78.62 and remained below 79.00 in Asian trading hours today. Japanese Yen The yen is extending its 5-day rally against the greenback. Pair USD/JPY fell yesterday to the lowest level since October 31 – 76.02 and traded this morning close to 76.00. The Japan’s finance minister Jun Azumi told reporters today according to Bloomberg that “Speculative moves are increasing in the market and we can’t overlook them.” He also mentioned that with the Fed’s pledge to keep low rates until 2014 “short- term speculative buying” of the yen has intensified. The single currency looks more stable against the yen. Pair EUR/JPY remains slightly above 100.00. Australian Dollar The Australian dollar strengthened considerably against the greenback yesterday and even touched today its highest level since the beginning of September 2011 – 1.0759. The rally is supported by the general investors’ optimism and after reports showed the nation’s trade balance surplus increased in December more than economists projected. The Bureau of Statistics reported that exports exceeded imports by 1.7 billion Australian dollars, a rise of 366 million on the surplus in November.