Dollar jumps in Asia

The dollar hit a one-week high against a basket of currencies on Wednesday, getting a boost as the Australian dollar dropped to an 11-week low after Australia posted a surprise trade deficit. The country recorded a A$480 million deficit in February compared to market expectations for a surplus of A$1.0 billion, adding fuel to expectations its central bank would cut interest rates in May.
The Aussie, which had been under pressure after the Reserve Bank of Australia on Tuesday opened the door for a rate cut next month, fell as far as $1.0263, its lowest level since mid-January. The disappointing Australian data spurred broad selling of currencies in the Asia-Pacific region, said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.
"It looks like the market wants to make a try for the upside in dollar/Asia pairs and to test the downside in the Aussie as well as the Kiwi," he said. The Australian dollar was changing hands at $1.0274, down 0.5 percent from late US trade on Tuesday. Its earlier drop stalled near support at $1.0261, the 50 percent retracement of its November to February rally. If that support is clearly breached, a possible further support level is $1.0120, the 61.8 percent retracement of the same rally.
The drop in the Aussie spilled over into the euro and gave an added lift to the greenback, which had climbed the previous day when markets took comments from the US Federal Reserve as lessening the chances of more Fed monetary stimulus. The greenback climbed as far as 79.586 against a basket of currencies, its highest level since March 26, and well above a one-month low of 78.664 hit the previous day.
The move higher followed the release of the minutes of the Fed's March policy meeting which disappointed those hoping for a step toward further quantitative easing. After surging against the yen on Tuesday, helped by the spike in Treasury yields, the dollar gave back a bit of ground against the Japanese currency, dipping 0.2 percent to 82.65 yen. The euro slipped 0.3 percent to $1.3195. One possible support area lies near $1.3150/60, which roughly coincides with the single currency's 100-day moving average and the 61.8 percent retracement of its rally in the latter half of March.