SYDNEY/WELLINGTON: The Australian and New Zealand dollars hovered near six-week lows against a vigorous euro on Tuesday and were firm versus their US counterpart as markets waited for the Reserve Bank of Australia (RBA) policy decision.
Australian data further fuels speculation the RBA will cut rates by 25 basis points to 3.0 percent at its monthly meeting. A decision will be announced at 0330 GMT.
Interbank futures imply a four-in-five chance of an easing in rates, which would match the record low reached during the global financial crisis, while swap markets put the probability at 91 percent.
Aussie steady at $1.0424 from $1.0418 early, having briefly dipped to $1.0393 on Monday.
Data out on Tuesday showed a sharp fall of 7.6 pct in new home approvals for Oct, vs forecasts of a 2.0 decline in a notoriously volatile series.
More importantly, government spending skidded 2 pct in Q3, implying a large drag on economic growth in the quarter. GDP figures are due out on Wednesday.
With markets almost fully priced for a rate cut, an easing might have only a limited impact on the Aussie while no move at all would likely see it sharply higher.
If it does cut, focus will be on the RBA statement for hints of more easing into next year. Key support found at $1.0365, the 61.8 pct retracement of last month's high and low. Resistance seen near $1.0450.
Antipodeans under renewed pressure vs the euro as investor sentiment in Europe improves.
Euro at A$1.2520, having climbed to A$1.2544 on Monday and NZ$1.5890, close to NZ$1.5925, its highest on both currencies since late October.
Key Fibo resistance seen at A$1.2568, the 61.8 pct of the Oct-Nov move for the Aussie, with a break above initially targeting A$1.2675, ahead of A$1.2825.
Barriers for the kiwi found near NZ$1.5960 with support at NZ$1.5851, the 200-day MA.
Against the US dollar, the kiwi is quiet at $0.8210, also little changed from late local levels on Monday. Technical support found around $0.8200. Aussie steady on the kiwi around NZ$1.2691, with markets largely discounting a 25 bps cut in Australia. If the RBA surprises with no move, the Aussie will rise.
NZ commodity prices recover further in Nov, with prices up 1 pct, the fourth monthly increase. Prices have now risen 6 pct from a 28-month low struck in July.
NZ rate review due Thursday, with economists expecting no change in key rate. Swap rates indicate a 17 pct chance of a cut due to global risks and recent weak local data.
NZ government bonds lower, pushing yields 1 basis points higher along the curve.
Australian government bond futures slip, with the three-year contract down 0.040 points at 97.390, while the 10-year contract 0.045 points lower to 96.890.
Comments
Comments are closed.