Article by ForexTime
The Australian dollar clawed its way off eight-month lows on Thursday after an attempt on the downside fizzled out and squeezed bearish bets, giving a fillip to the New Zealand dollar.
The Aussie dollar rallied to $0.8798, from $0.8728 in early trade, helped by surprisingly strong 3 percent increase in Australian building approvals.
The Aussie had already started a modest recovery overnight after the market was caught short trying to trigger stops below $0.8660, a major support level and the 2014 trough.
The Aussie also gained around 0.6 percent versus the euro, pound and yen, pulling away from recent lows.
“We are in the mood where the Aussie can at least stabilise around $0.8800/20, but it is more a correction after being heavily sold,” said Sean Callow, a senior currency strategist at Westpac.
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The Aussie has dropped more than 6 percent in the past month amid a strengthening U.S. currency and sliding global commodity prices. A breach of $0.8660 would take it to the weakest in more than four years.
Other local data included a slightly wider-than-expected trade deficit of A$787 million.
Also of note was the Reserve Bank of Australia telling a Senate inquiry that regulators were considering new steps to rein in lending for housing investment with an announcement likely by the end of the year.
Article by ForexTime
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