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OPTIMISM on commodity-related and emerging-markets currencies continues to grow, following rallies in capital markets and some positive economic and production figures. In a forex survey, Barclays found that some 20.5 per cent of 605 clients polled favour the Australian dollar, while 57.5 per cent believed that Asian currencies will outperform over the next three months.
In contrast, a number of the respondents (37.5 per cent) recommended shorting the greenback.
The bullishness is surprising, given that some 37 per cent of respondents said that the bear market rally is nearing its end, compared with some 23.5 per cent who thought that the bear market rally should continue. Most also felt that any global economic recovery will be shallow or temporary.
Said Barclays forex strategist David Forrester: 'Investors felt that the long on Aussie and short on the greenback represent the best risk-reward at present.
'But if the so-called 'bear market' rally were to end, it is likely that these positions would be reversed.'
Meanwhile, Australia's economy defied a global recession that has swamped the US, the UK and Japan, unexpectedly expanding in the first quarter on rising exports and consumer spending.
Gross domestic product rebounded to grow 0.4 per cent in the three months to March 31.
RBC Capital Markets noted that 'recent data, if anything, highlight upside GDP risks, which might have helped boost Aussie dollar overnight. Aussie jumped from a test of 0.8050 to a high of 0.8231, and the Aussie heads into the Asian session near the high.'
Yesterday, the Aussie dollar traded as high as US$0.818 - up from US$0.8162 a day earlier.
Meanwhile, the New Zealand dollar hovered near US$0.6477 and RBC thinks it may reach US$0.6666 and then US$0.6956.
On the Aussie-yen parity, the analysts felt that it could touch 80, while kiwi-yen seems poised to head towards 65 on a break of 61.13.
UOB Economics-Treasury Research said that Asian currencies are likely to be supported today following the better-than expected US April pending home sales data last night which will possibly encourage some more risk taking.
However, watch out for central banks' interventions.
Yesterday, the focus in Asia was on the Bank Indonesia's meeting, where the central bank cut its benchmark rate by 25 basis points to 7 per cent.
The stable prices and stability of the Indonesian rupiah should now facilitate the forecast rate cut, said JP Morgan. The rupiah traded at 10,115 per US dollar, from 10,260 a day ago.
Meanwhile, the Singapore dollar traded at 1.4409 per US dollar - down from 1.4378 on Tuesday evening. The MAS was rumoured to have intervened early during the Asian session, but positive purchasing managers index data for May will also support sentiment on the currency.
Meanwhile, the euro lost ground against the US dollar on concerns that US payrolls declined. The US dollar was at 1.4219 per euro - down from 1.4268 previously.
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