Commodity-linked currencies such as the Canadian, New Zealand and Australian Dollars benefited from a recently released report which showed that the factory sector in China accelerated for the first time since the end of last year with new orders unexpectedly surging, an indication to investors that Chinese growth may again be on the verge of accelerating. Traders will also be looking for clues from the Japanese government which is likely to announce further measures to stimulate the Japanese economy.
As reported at 11:28 a.m. (JST) in Tokyo, the USD/CAD was trading at C$1.0725, close to the recently struck 5½ month high while the AUD/USD was trading at $0.9424 and the NZD/USD at $0.8711, both within striking distance of yesterday’s multi-week peaks.
FX Traders Await Abe Announcement
Shinzo Abe, the Prime Minister of Japan, is expected to announce additional “Third Arrow” policies to existing monetary and fiscal policies which could include tax cuts for corporations which would be phased in, reformation of Japan’s government pension plan and proposed deregulation of dance halls. Given that these measures are already anticipated, analysts are concerned that the impact on the Japanese Yen will have already been priced in, thus response from investors could be lackluster.