Asian stocks gained on Tuesday as hopes for an agreement on Greece’s debt situation lifted the risk appetite, while a sharp rebound in oil prices boosted commodity currencies such as the Canadian dollar and Norwegian crown.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.2 per cent. Japan’s Nikkei gained 0.3 per cent and Australian shares were up 0.7 per cent.
Greece’s new finance minister told the Financial Times about a proposal to swap his country’s outstanding debt for new growth-linked bonds, hopefully ending a standoff with its international creditors.
Also a boon for risk assets was an extended rally by crude oil which had plumbed multi-year lows last week and helped fuel concerns about its negative impact on the global economy.
US crude oil was up 1.4 per cent at $50.25 a barrel, already having surged more than 10 per cent over the past two sessions as some investors bet that a bottom had been reached after a seven-month long rout.
Currencies from oil exporting countries such as the Canadian dollar and Norwegian crown held on to solid gains as a result.
The Canadian dollar rallied to C$1.2557 per USD, well off a near six-year low of C$1.2800. The Norwegian crown climbed as far as 7.6142 per USD, up 2.3 per cent in the past two sessions.
Monetary policy decision
The Australian dollar was also swept off its recent low, climbing above 78 US cents and off a near six-year trough of $0.7720.
Much of the currency market’s focus was on the Reserve Bank of Australia’s monetary policy decision due at 0330 GMT amid expectations that it will announce an interest rate cut.
“The market is completely divided on whether the central bank should cut interest rates, which pretty much guarantees a big reaction in AUD/USD,’’ Kathy Lien, managing director at BK Asset Management, wrote in a note to clients.
Even if the RBA does not cut rates this time around, it is seen laying the groundwork for an easing at its next meeting in March.
The euro stood steady at $1.1334 after gaining 0.5 per cent overnight on hopes for a deal on Greek debt and poor US economic data.
US consumer, construction spending
Monday’s indicators showed US consumer spending fell and construction spending rose less than expected in December, while an industry report pointed to slowing in the manufacturing sector in January.
The dollar was little changed at 117.62 yen after briefly touching a two-week low of 116.64 overnight.