Forex Market: AUD/USD hits fresh four-month highs on upbeat Australian mortgage report

The Aussie advanced to the strongest level in more than four months against its US counterpart, while the kiwi, as the New Zealand dollar is best known, touched highs unseen in 2-1/2 years against the greenback. Demand for the South-Pacific currencies was heightened after data showed the number of home-loan approvals rose at a faster-than-projected pace in the larger nation in February.

AUD/USD hit a session high at 0.9386 at 02:15 GMT, subsequently the pair consolidated at 0.9383, adding 0.27% for the day. Support was likely to be received at April 8th low, 0.9266, while resistance was to be encountered at November 20th high, 0.9442.

The Aussie dollar was supported after data by the nations Statistics Bureau showed today that home-loan approvals rose 2.3% in February from a month earlier, capping the biggest advance since September. Analysts had predicted a 1.5% increase, after the number of mortgage approvals remained unchanged in January.

Also fanning positive sentiment, a gauge of carry trades jumped to the highest in almost 20 months, after volatility dropped to the weakest in seven years, boosting returns from holding higher yielding currencies, including the Aussie and the kiwi.

“The home loans data continue the theme of a basing in the Australian economy, which should support the Aussie,” said Sam Tuck, a senior currency strategist at ANZ Bank New Zealand Ltd. in Auckland, cited by Bloomberg. “The New Zealand dollar is twinned to the Aussie at the moment.”

A separate report by Westpack Banking Corp. released the results of its monthly consumer confidence survey, which showed that investors confidence rose for the first time since November last year, coming in 0.3% higher in April from a month ago, when the index registered a 0.7% drop.

Meanwhile, demand for the US dollar was heightened ahead of the release of the Federal Reserve minutes from its latest policy meeting, as investors assessed when the central bank will start raising interest rates.

At 18:00 GMT the Federal Open Market Committee (FOMC) will release the minutes from its meeting on policy held on March 18th-19th. The minutes offer detailed insights on FOMC’s monetary policy stance. High volatility is usually present after the publication.

At 19:30 GMT Fed President for Chicago Charles Evans is expected to take a statement. He was a FOMC voting member in September – December 2007, 2009 and 2011. Statements by FOMC members attract investors’ attention, as they may offer clues over the possible direction of monetary policy in the future. Evans’s remarks may indicate a positive or negative trend in a short term.

Elsewhere, the kiwi advanced to highs unseen since August 2011 against the greenback. NZD/USD hit a session high at 0.8708 at 01:45 GMT, after which consolidation followed at 0.8699, adding 0.29% for the day. Support was likely to be received at April 8th low, 0.8606, while resistance was to be encountered at August 2nd 2011 high, 0.8784.