2010.10.0607:03:00UTC+00Australian Dollar Surges Up On Strong Equities

The Australian dollar extended its previous session's gains against major opponents during early European trading on Wednesday as a rise in equities boosted demand for higher-yielding currencies. The Aussie climbed to more than a 2-year high against the US dollar and a 2-day high versus the yen.

Asian and European stocks rose today on hopes of further quantitative easing by the U.S. Federal Reserve at its November policy meeting following the Bank of Japan's surprise move yesterday to reinstate zero interest rates and provide stimulus to the economy.

In Asia, Japan's Nikkei 225 index rose 1.8%, Hong Kong's Hang Seng climbed 1.1%, New Zealand's NZX 50 index gained 0.5%, South Korea's Kospi advanced 1.3%, Taiwan's main index soared 1%. Australia's S&P 200 index and the All Ordinaries index climbed 1.7% each.

In Europe, Germany's DAX climbed 1.1% thus far, France's CAC 40 index soared 1.2% and U.K.'s FTSE 100 index gained 1%.

At 5:00 am ET, the Aussie jumped to more than a 2-year high of 0.9783 versus the greenback, which may be compared to yesterday's close of 0.9720. The pair is now worth 0.9770 with 0.985 seen as the next upside target level.

Against its Japanese counterpart, the Australian currency hit a new 2-day high of 81.26 by about 5:00 am ET. The aussie-yen pair that closed Tuesday's New York session at 80.90, is now trading at 81.09. The next upside target level for the aussie is seen at 81.4.

During today's European deals, the Aussie also soared further against the euro and reached 1.4172 as of 5:00 am ET. The euro-aussie pair is now worth 1.4190. If the aussie advances further, it may likely target the 1.412 level. At yesterday's close, the pair was at 1.4245.

In economic news, euro area gross domestic product grew 1% in the second quarter on a sequential basis, according to second estimates from Eurostat. This follows a 0.3% rise in the first quarter.

Annually, economic growth was 1.9%, much faster than the 0.8% growth recorded in the previous quarter. The second quarter growth figures matched the estimate published on September 2.

The Aussie gained against the Canadian dollar too. The aussie-loonie pair is currently worth 0.9905, compared to yesterday's close of 0.9875. The next upside target level for the aussie is seen at 0.992.

Looking ahead, the U.S. ADP employment report for September has been slated for release in the New York session.

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