SYDNEY/WELLINGTON: The Aussie and New Zealand dollars rallied against the US dollar on Thursday, helped by talk China may allow its currency to rise faster and a bounce in Asian stock markets.
The Aussie climbs to $1.0260, from $1.0206 in New York, having briefly shed a cent to a session low of $1.0110 after weaker-than-expected domestic jobs data.
Record high fix in China's yuan was seen as negative for the US dollar and provided support to the Aussie
Talk of buying from Asian central banks and regional stocks holding up better than offshore markets brightened the mood and helped the Antipodeans.
Major support seen at $1.0065 with resistance at $1.0292. Aussie touched a five-month trough of $0.9927 this week when markets spiralled down on the US rating downgrade.
Australia employment fell short of expectations by dipping by 100 in July while the jobless rate surprised with a rise to an eight-month high, adding to market pressure for a cut in interest rates.
Interbank futures fully priced for at-least 25 basis point cut in the 4.75pc cash rate in September, and imply rates at 3.53 pct by Christmas.
Australian bond futures pare hefty offshore gains as stocks improved. The 3-year contract is up 0.10 points at 96.170. The 10-year 0.13 points higher at 95.545, implying a yield of 4.45 pct.
The NZ dollar powers back up to $0.8233, after falling around three cents to $0.8070 offshore. Kiwi was among hardest hit when wave of risk aversion encouraged heavy selling or commodity currencies.
Trading still extremely volatile, with kiwi now up 2 pct on the day. Resistance around $0.8260 with support at $0.8065.
Aussie retreats to NZ$1.2446, after spiking to a two-week high of NZ$1.2546 on stop-loss buying following the sharp drop in kiwi overnight.
NZ manufacturing activity eases in July, but remains firmly in positive territory despite a strong local currency, while house prices and sales were softer.
Markets still imply 12 pct chance of a 25 bps rate hike next month and 40 bps over the next 12 months.
NZ government debt prices firm, after tracking US Treasuries higher in safe-haven bids, with local yields falling as much as 7 bps.
Copyright Reuters, 2011
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