WELLINGTON/SYDNEY: The Australian and New Zealand dollars held not far from six-month highs against the US dollar on Monday, still benefiting from improved global sentiment in the wake of the US Federal Reserve's aggressive stimulus plan launched last week.
The Aussie consolidated recent hefty gains at $1.0539, from $1.0545 in early trade. It exploded to $1.0625 on Friday, its highest in almost six months before it ran into heavy resistance.
The local currency has climbed an impressive four cents in the seven sessions to Friday, leading some analysts to say the rally has probably ran its course.
"We've seen the top for the Aussie," said Alvin Pontoh, a macro strategist at TD Securities in Singapore, marking the local dollar at $1.0400 by the end of the year.
"The sugar-hit following the Fed won't last very long... Within a month, the Aussie appreciation will disappear."
This week's main local event is minutes of the Reserve Bank of Australia's (RBA) September meeting due on Tuesday. They could show growing concern with weakness in China and commodity prices, along with the strength of the Aussie.
The RBA has kept rates steady at 3.5 percent earlier this month, but the high Australian dollar is at odds with recent weakness in iron ore prices, and argues for another cut in interest rates.
A failure to sustain a break above $1.0600 signals a period of consolidation between $1.0625 and $1.0425. Charts indicate bearish shooting star on daily candles.
Traders cited option-related selling between $1.0625-50 and option barriers at $1.0650 with stops above $1.0670.
A racy euro managed to outperform the Antipodean currencies, extending its already large gains of recent weeks. It lunged as far as A$1.2483, its highest since late June. A break of key resistance of A$1.2486, the 61.8 percent of the May-August fall, would open the way to a retest of the 2012 peak of A$1.3037.
The euro has gained around 9 cents since Aug. 2 as investors trimmed massive short euro positions.
The broad risk rally sent Australian debt futures reeling, with the move exacerbated by the rolling over of the September contract into December.
The three-year contract skidded 0.095 points to 97.205, its lowest in a month, while the 10-year contract eased 0.11 points to 96.700, its weakest since Aug. 22.
NEW ZEALAND DOLLAR
The New Zealand dollar marked time at $0.8284, from $0.8288 in New York on Friday, having risen to a six-month peak of $0.8354 late last week. Markets were bracing for current account and growth data this week.
"Relatively poor New Zealand data this week (would) likely to take the shine off the kiwi," said ANZ National chief economist Cameron Bagri said.
A Reuters poll expected the current account deficit to widen to 5.2 percent of GDP in the second quarter, from 4.8 percent in the first quarter. The economy is forecast to grow by 0.3 percent, compared to the first quarter when it expanded by a strong 1.1 percent.
The data, however, was not expected to alter market expectations for interest rates to stay at a record low 2.5 percent for a prolonged period.
Figures out Monday showed a slight recovery in consumer sentiment while activity in the services sector slipped to a two-year low, underlining the patchy nature of the country's economic recovery.
Technically, the kiwi was expected to see support coming through around $0.8225, the high on Aug 6, while resistance was seen around $0.8325-0.8335, levels hit in April and August.
New Zealand government bonds weakened, sending yields 6.5 basis points higher at the long end of the curve.
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