(eToro Blog) The Australian dollar moved lower retracing back to trend line support despite increased risk taking across financial markets which was boosted by comments from EC President Jean-Claude Juncker suggesting that resolution to the Greece's debt crisis will be reached by the end of next month.

The New Zealand dollar, also continues to climb following the release of strong trade figures, a strong business survey yesterday and continued support from reports of investment from China's SWF. Australia's dollar dropped to a three-month low against New Zealand's after data showed the bigger nation's current-account deficit widened and home-building approvals fell.

The Bureau of Statistics in Sydney said the Australian current- account deficit increased to A$10.45 billion ($11.21 billion) in the first quarter from a revised A$8.09 billion. The number of permits granted to build or renovate houses and apartments declined 1.3 percent in April from March, separate data showed.

Moody's investor services said that a high Aussie was not an immediate threat to ratings. Moody's said that in the near-to-medium term, the ratings of major Australian companies should be able to cope with the dollar's record highs, even if it surged to $US1.20 and stayed there for the next 12 to 18 months.

The AUD/JPY is currently trading at 87.3 in a tight range between the 84-88 level. The pair is apparently at a critical juncture and a close above the 88 level would pave the way for further gains.However a break of the 84 support would ignite heavy selling and could lead the pair to a sustainability bearish correction all the way down to the 8o level.On the fundamental front the disappointing Chinese manufacturing PMI would lead the pair to slide lower as Aussie strength is strongly linked to Chinese growth momentum.

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