SYDNEY/WELLINGTON: The Australian and New Zealand dollars consolidated recent gains on Monday, with the kiwi hitting a six-year high on the yen, though progress was capped by stiff resistance and caution ahead of key economic data in China later this week.
The Aussie was holding at $0.9246, half a cent below Friday's 16-month peak of $0.9296, as the failure to break above 93 cents encouraged investors to book profits.
Support is seen at $0.9214. Major resistance is expected at $0.9340, the 61.8 percent retracement of the October-January fall, with daily moving averages suggesting the Aussie would trend higher.
The Aussie has gained 3.5 percent this month, which if sustained, it would be the largest monthly increase since October.
At a policy review on Tuesday, the Reserve Bank of Australia (RBA) is considered certain to keep rates at 2.5 percent, where they have been since August last year. Attention will be focused on the tone of the accompanying statement, including any comment on the recent currency strength.
"The RBA Board may dial up their discomfort with the level of the $A in Tuesday's statement, but "jawboning" of the $A is not useful from an economic perspective," said NAB's Senior Economist Spiros Papadopoulos. "Fundamentals will continue to drive the $A in the longer run." China's official manufacturing PMI survey will also be released on Tuesday.
The Antipodean currencies have been large beneficiaries of hopes that China, their key export market, will soon take steps to stimulate a slowing economy. Chinese Premier Li Keqiang said on Friday the government had the necessary policies in place and would push ahead with infrastructure investment.
Both Aussie and kiwi crawled higher against a soggy yen.
The Aussie rose to a five-month peak of 95.27 yen, but the kiwi was the standout, reaching a 6-year high of 89.26.
Both have gained more than 4 percent against the yen in March.
The New Zealand dollar was firm at $0.8666, after hitting a two-and-a-half year high of $0.8698 on Friday.
It remains driven by solid data and expectations of further rate rises by the central bank through the year.
"We see New Zealand dollar strength continuing, and further pushes to the upside are likely in this low volatility environment," said ASB Bank economist Christina Leung.
Near-term support is seen at $0.8640, with resistance seen at Friday's high and then $0.8733.
The kiwi has gained 3.4 percent against the US dollar this month as the Reserve Bank of New Zealand started its tightening cycle and promised more to come as the economy gathers strength.
Data remained supportive. Westpac's employment confidence survey showed a rise in sentiment to a five-year high, building consents were slightly lower and business sentiment eased moderately from a 20-year high.
New Zealand government bonds 0#NZTSY= were largely unchanged.
Australian government bond futures eased, with the three-year bond contract down 3 ticks to 96.940.
The 10-year contract also fell 3 ticks to 95.895.
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