Forex - Aussie weaker after strong overnight gains, Kiwi up on trade

Investing.com - The Australian dollar eased in early trade in Asia on Thursday ahead of capital spending data after solid overnight gains while the Kiwi gained on a narrower than expected trade gap.

AUD/USD traded at 0.7884, down 0.03%, while NZD/USD changed hands at 0.7570, up 0.21%. USD/JPY changed hands 118.85, flat.

New Zealand reports January trade data of a deficit of NZ$1.41 billion, narrower than the NZ$1.65 billion expected.

Up ahead, Australia reports private new Capex data at 1130 (0030 GMT) with a 2.0% quarter-on-quarter fall expected.

In Japan, central bank board member board member Koji Ishida will speak to business leaders in Yokoham and hold a news conference from 1430 to 1500 (0530 to 0600 GMT).

Overnight, the dollar remained broadly lower against a basket of other major currencies on Wednesday after downbeat U.S. new home sales data and as Tuesday's remarks by Federal Reserve Chair Janet Yellen continued to weigh.

The U.S. dollar weakened 0.70% against its Australian counterpart on Wednesday in the U.S. as concluded her second day of testimony on Capitol Hill.

At one point on Wednesday, AUD/USD reached a one-month high of 0.7900 -- an increase of more than 0.75%. The pair closed on Wednesday in U.S. markets up 0.054 points to 0.7886.

In a report, the U.S. Commerce Department said new home sales fell by 0.2% to 481,000 units last month, compared to expectations for a decline of 1.3% to 475,000. New home sales in December were revised up to 482,000 units from a previously reported 481,000 units.

On Tuesday, Fed Chair Yellen said it was “unlikely” that economic conditions would warrant an interest rate increase for “at least the next couple of FOMC meetings”.

In prepared remarks during testimony to the Senate Banking Committee, Yellen added that if the economy keeps improving as the Fed expects it will modify its forward guidance, but emphasized that a modification of its language should not be read as indicating that a rate hike would automatically happen within a number of meetings.

The remarks prompted investors to push back expectations for a mid-year U.S. interest rate hike.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was quoted flat at 94.24.