Monday, 12 November 2012 11:37
SYDNEY/WELLINGTON: The Australian and New Zealand dollars edged higher on Monday, underpinned by a surging yuan, though investors remained wary about fiscal woes in the United States and uncertainty in Europe.
The kiwi dollar rose 0.2 percent on the day to $0.8163 , from $0.8144 in New York on Friday. Last week, it fell to a near three-week low of $0.8123 following a very weak jobs report at home, which revived expectations of a rate cut next month.
"The likelihood of further weak Q3 data from New Zealand, plus US fiscal cliff negotiations, should depress the kiwi to $0.8060 this week," said Westpac strategist Imre Speizer.
He said pressure on kiwi was also building as the extent of long positioning in the risk currency has waned in recent weeks.
Near-term support was seen around $0.8120 ahead of $0.8100, the low on Oct. 23, with Friday's session high around $0.8180 likely to cap the topside for now.
The Australian dollar gained a quarter of a cent on the day to fetch $1.0425, getting closer to a six-week high of $1.0480 touched last week.
The Antipodean currencies picked up a tail wind from an unusually strong fixing in the yuan, which helped send the spot rate to a record high versus the greenback.
The Chinese currency has appreciated 1.0 percent so far this year.
The Aussie and kiwi are used as proxies for Asian play and tend to be sensitive to news out of Beijing.
The Australian dollar was already underpinned by weekend trade data from China, a key customer, showing its trade surplus ballooned to its biggest in 45 months in October.
A trader at a European bank in Singapore said talk of the central bank of Russia sighted buying the Australian dollar also provided support.
The Australian dollar has been a major beneficiary of a global yield hunt, particularly from central banks and sovereign funds from as far as Colombia and Botswana.
Dealers cited tops at $1.0450, with a Singapore-based trader adding the longer the Aussie held above $1.0400, the more likely it was going to test the stops.
Next resistance was found at last week's peak of $1.0480 with support near $1.0350/60, the 38.2 percent retracement of the Oct 8-Nov 7 rally as well as the 100-day MA.
The Antipodean currencies edged up against the yen after Japan's economy shrank 0.9 percent in Q3, marking the first contraction in three quarters.
The gloomy economic news will keep the Bank of Japan under pressure to boost monetary stimulus to fight deflation and a strong yen.
The Aussie rose to 82.79, having struck a six-month peak above 84 yen last week, while the kiwi nudged up to 64.83.
The kiwi struggled against the Aussie, which sat within a whisker of a two-month high of NZ$1.2788 set on Friday.
In focus this week will be New Zealand's third-quarter retail sales due on Wednesday and it will be watched for signs of slowing demand.
Data out in Australia on Monday showed home financing rose 0.9 percent in September, a touch under forecasts of a 1 percent gain.
Australian government bonds edged up with the longer end jumping to one month highs. The three-year contract added 0.02 points to 97.450, while the 10-year contract leapt to 97.025, its strongest since mid-October.
New Zealand government bonds were firmer, nudging yields as much as 3 basis points lower in the long end.
Copyright Reuters, 2012