The Australian dollar jumped after first quarter GDP data showed that Australian economy expanded at more than twice the pace that was forecast. Household spending and business investment drive growth to push up GDP by 1.3 percent, far above forecasts of 0.5 percent. Aussie surged due to lower expectations on the future extent of rate cuts. AUDUSD rallied more than one percent to 0.9860, moving well off an 8-month low of 0.9579 hit last week.
Euro rose due to the upbeat sentiment after riskier assets rallied following strong growth data from Australia. The single currency recovered some of yesterday’s losses when it fell against the dollar on concerns of Spain’s warning it was losing access to credit markets. EURUSD opened in Asia at 1.2448 and rose to 1.2515. Focus turns to the European Central Bank meeting later today. Investors are cautious, however many do not expect a rate cut and expect the ECB to keep rates at 1 percent.
Sterling tracked the euro higher, as risk was back on. Cable had moved little in the past two days due to markets in the UK being closed for holidays to celebrate the Queen’s Diamond Jubilee. GBPUSD opened the Asian session at 1.5380 and edged up to 1.5432.
Yen lost strength as stellar Australian GDP data lifted risk sentiment and dampened demand for the safe haven Japanese currency. After the data, AUDJPY surged from 1.2862 to 1.2930. EURJPY rose 0.8 percent during Asian trading hours to hit a high of 98.76 moving off Friday’s 11-year low of 95.57. USDJPY climbed to 78.94 from a low of 78.60.