Monday, 23 April 2012 09:29
WELLINGTON/SYDNEY: The Australian and New Zealand dollars nudged lower on Monday as a very soft reading on producer inflation brought an Australian rate cut closer while the market waited anxiously for a flash reading of China's manufacturing activity from HSBC.
Eyes on China at 0230 GMT with HSBC China flash PMI for April after it disappointed in March. Any further drop from 48.3 would add to concerns about a hard landing and pressure the Aussie, which is often treated as a proxy for Chinese risk.
Aussie eases to $1.0327, from $1.0371 in NY on Friday. It dropped around 30 pips on weaker-than-expected PPI numbers. Key support seen around $1.0300.
The New Zealand dollar off 0.4 percent on the day to $0.8153, dragged lower by the Aussie. Near term support solid at $0.8120, while a slide below that would open up a fall to $0.8084, its 200-day MA. Market participants anticipate offers around $0.8200, while more resistance is seen at $0.8230.
Antipodean currencies slip against a broadly strong yen after BOJ governor over the weekend sounded cautious on risks of excessive easing. His comments sparked a wave of profit-taking with the Aussie down 0.7 pct in Asian trade to 84.05 yen and heading for key support around 83.87. NZD falls 0.5 pct to 66.30 yen, off last week's high of 66.94.
Key event for Australia this week is first quarter inflation, while New Zealand has a central bank rate review.
The Reserve Bank of Australia (RBA) has already indicated it will consider cutting the 4.25 percent cash rate at the May 1 policy meeting, providing the inflation numbers are tame.
Financial markets imply a 92 percent probability of a cut to 4 percent in May, and as much as 98 basis points of easing over the next 12 months.
Investors await a policy announcement by the Reserve Bank of New Zealand on Thursday. Markets give virtually no chance of a rate move by the central bank, and the focus is on how dovish the statement will be.
Analysts see little or no chance for a move from the current record low of 2.5 percent before the December review. Benign inflation data last week prompted some to push out further their forecast of a hike to early next year.
New Zealand government bond prices slip a touch, prodding yields around 1 basis point higher across the curve.
Australian debt futures nudge to three-month peaks with the three-year contract up 0.06 points to 96.840, while the 10-year contract 0.070 points higher at 96.285.
Copyright Reuters, 2012