Antipodean Currencies Rise Amid Risk-on Mood

(RTTNews) - The antipodean currencies such as the Australia and the New Zealand dollars strengthened against other major currencies in the Asian session on Wednesday, amid growing optimism about the outlook for interest rates after sharp downward revisions in U.S. jobs data and ahead of the release of the closely watched US inflation data later in the week. Currencies in the region also strengthened against the US dollar.

The US Labor Department is scheduled to release reports on producer price inflation and consumer price inflation later today and tomorrow, respectively. The inflation data could influence how aggressively the US Fed lowers interest rates at its meeting next week.

Amid growing concerns over a softening U.S. labor market, traders currently expect almost three Fed cuts this year, starting this month.

Ahead of the data, CME Group's FedWatch Tool is currently indicating a 93.7 percent chance the Fed will lower rates by a quarter point and a slim 6.3 percent chance of a half-point rate cut.

In economic news, China's consumer prices declined more than expected in August on weaker demand and producer prices continued to fall, strengthening calls for more actions to bolster domestic consumption amid slowing exports growth.

The consumer price index dropped 0.4 percent from a year ago after remaining flat in July, the National Bureau of Statistics reported Wednesday. Prices were expected to fall 0.2 percent.

By contrast, core inflation that excludes prices of food and energy, rose to 0.9 percent in August, the fastest in more than two years, from 0.8 percent in July.

On a monthly basis, the CPI remained flat in August, while prices were forecast to edge up 0.1 percent.

In a separate communiqué, the NBS showed that producer price inflation has remained negative for nearly three years highlighting persistent deflationary trend.

Nonetheless, producer prices dropped at a slower pace of 2.9 percent from a year ago in August, following a 3.6 percent decrease in July. The annual fall came in line with expectations. In the Asian trading today, the Australian dollar rose to nearly a 9-month high of 97.50 against the yen, a 9-day high of 1.7706 against the euro and nearly a 10-month high of 0.9156 against the Canadian dollar, from yesterday's closing quotes of 97.07, 1.11170 and 0.9118, respectively. If the aussie extends its uptrend, it is likely to find resistance around 98.00 against the yen, 1.75 against the euro and 0.92 against the loonie.

Against the U.S. dollar, the aussie edged up to 0.6616 from an early 2-day low of 0.6581. The aussie may test resistance around the 0.67 region.

The aussie edged up to 1.1122 against the NZ dollar, from Tuesday's closing value of 1.1112. On the upside, 1.12 is seen as the next resistance level for the aussie.

The NZ dollar rose to a 2-day high of 87.74 against the yen and more than a 3-week high of 1.9683 against the euro, from yesterday's closing quotes of 87.35 and 1.9745, respectively. If the kiwi extends its uptrend, it is likely to find resistance around 89.00 against the yen and 1.94 against the euro.

Against the U.S. dollar, the kiwi edged up to 0.5952 from an early 2-day low of 0.5880. The kiwi is likely to find resistance around the 0.60 region.

Looking ahead, U.S. MBA mortgage approvals data, U.S. PPI for August, wholesale inventories data for July and U.S. EIA crude oil data are slated for release in the New York session.