WELLINGTON/SYDNEY: The Australian and New Zealand dollars stayed firm near multi-week highs on Monday, displaying yet again resilience to a cautious mood as Greece is still in negotiations to strike a crucial debt swap deal to avoid a messy default.
The Aussie consolidated at $1.0486, against $1.0484 late in New York on Friday, having touched an 11-week peak of $1.0495 earlier in the session.
Analysts cited chart resistance at $1.0496, a major retracement level, but said technicals pointed to a further uptrend for the currency, which gained nearly 2 percent last week.
"Fundamentals like a weakening job market and a lessening of inflationary pressures don't seem to be impacting so far on the currency," said David Scutt, a trader at Arab Bank Australia.
Scutt said the rise of the Aussie is due in part to a lack of alternatives that would offer high yields in a relatively limited risk environment.
Australia is among 14 nations that still carry a top notch credit rating by S&P following a salvo of downgrades in Europe earlier this month.
"It doesn't really surprise me that (the Aussie)'s well bid," he added. "We'll see what happens after the consumer price report (CPI) comes out, that will be a big moment for the Aussie and the rates markets."
The CPI report for the fourth quarter is due on Wednesday and a benign reading would set the stage for a further cut in interest rates.
The prospect of a low number seemed to improve after figures on producer prices rose only marginally last quarter as domestically generated inflation was surprisingly subdued. .
Forecasts are for annual underlying inflation of 2.4 percent, well within the Reserve Bank's target band of 2.0 to 3.0 percent. Such an outcome would cement expectations for an interest rate cut at the central bank's Feb 7 policy meeting.
Interbank futures already imply a 62 percent chance of a 25 basis point-easing next month, with rates of 4 percent fully priced in by March.
Traders cited selling orders for the Aussie above $1.0500 where a pile of options and Australian corporate customers sit. Further resistance is found at $1.0517, the upper boundary of the Bolli band with support at $1.0450.
Trading was subdued as many Asian markets, including China, Hong Kong, Singapore and South Korea, are closed for the Lunar New Year holiday.
The Antipodean currencies were resilient despite caution over Greece as negotiations with private creditors to restructure the country's debt continued to drag on.
The euro gave back some of last week's solid gains against the Aussie and kiwi with dealers recommending to stay short the euro in favour of risk currencies.
"We are holding the EUR as our largest underweight and keeping the long side of our portfolio biased to the commodity currencies over their Scandinavian peers," even after both NOK and SEK bounced last week, Citi wrote in a note.
The euro slipped to A$1.2291, nearer to all-time lows of A$1.2220 last week. Against the kiwi it fell to NZ$1.5971, not far from a record trough of NZ$1.5863.
ANTIPODEANS ADVANCE ON YEN
Against the safe-haven yen, the Antipodeans held recent gains and were hovering near 10-week highs. The Aussie stood at 80.49 yen, up 2.6 percent for the year, while the kiwi stood at 61.98 yen, nearly 4 percent higher this month.
Technicals for AUD/JPY suggested a strong uptrend with the 200-day MA at 81.60 well in sight.
The New Zealand dollar held firm at $0.8060, after hovering between $0.8040 and $0.8072 in a quiet session. Having fallen steadily from August to November, the kiwi has recently staged a resurgence.
"The kiwi has broken out of the downtrend and needs to break $0.8200 to become an uptrend," said Derek Rankin of Rankin Treasury Advisory.
The key event for New Zealand this week is the central bank's rates review on Thursday, although no change is expected to the record low 2.5 percent rate.
Financial markets pricing implies a 6 percent risk of a rate cut and 4 basis points of cuts over the next 12 month.
New Zealand government bond prices were lower, with yields up to 8 basis points higher in the front end.
Australian bond futures gave back recent hefty gains, with the three-year contract down 0.03 points at 96.740, while the 10-year contract dips 0.04 points to 96.080.
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