SYDNEY/WELLINGTON: The Australian and New Zealand dollars rose to multi-week highs against their US counterpart and the yen on Monday following encouraging economic data in China.
The Aussie climbed as far as $0.9222, its highest since Aug 19, adding to last week's gains of more than 3 percent. It last fetched $0.9200 with key resistance was found at $0.9234.
Trade figures released over the weekend showed China's August exports grew more than expected, adding to evidence that the Asian giant's economy may have avoided a sharp slowdown.
Figures also showed Australian's trade surplus with China, its biggest single customer, was healthy at $4.6 billion for August.
Other data released on Monday included China's inflation which came in line with expectations at 2.6 percent in August from a year ago.
The next flash point for the Aussie will be China's retail sales figures due on Tuesday.
David Scutt, a trader at Arab Bank Australia said a positive reading could see the Aussie test $0.9300 cents.
Investors barely reacted to the outcome of Australia's national election, which as expected, saw the conservative Liberal-National Party coalition swept into power as investors overwhelmingly voted out the Labor Party.
The Aussie did get a boost after the yen fell across the board on expectations the Olympics games win could add as much as 3 trillion yen to the Japanese economy until 2020.
The news pushed up the Nikkei and the yen has been negatively correlated to the share market in recent months. There is also an assumption that an improvement in risk appetite by Japanese investors would lead them to buy more offshore assets, so pressuring the currency.
The Antipodeans climbed to a seven-week high against the yen with the Aussie briefly popping above 92. It last stood at 91.60 with little resistance seen until 92.71 ahead of 93.06, the July peak.
Likewise, the kiwi shot up above 80 yen to last trade at 79.44.
A private survey at home showed a fall in jobs ads for a sixth straight month in August, potentially pointing to a further rise in unemployment that could add to pressure for another cut in interest rates.
Meanwhile, financial markets have started to factor in an eventual rise in interest rates from the Reserve Bank of Australia (RBA), albeit not for many months yet.
In the short term, interbank futures <0#YIB:> still show a 42 percent chance of a cut in rates by Christmas. A majority of economists forecast one more easing by year-end as the RBA looks to stimulate non-resource sectors of the economy to offset a peak in the mining boom.
The New Zealand dollar was holding at $0.7985, after touching a three-week high of $0.8032 hit in the wake of soft US jobs numbers.
Bids at $0.7950 were providing a floor for the kiwi in the near term, but risks loom on Thursday when the Reserve Bank of New Zealand (RBNZ) announces its quarterly monetary policy statement.
The RBNZ has pledged to hold interest rates at a record low 2.5 percent through year-end. RBNZ Governor Graeme Wheeler will likely be reluctant to sound too hawkish for fear of pushing the kiwi higher, a big drag for sectors such as manufacturing.
"There are plenty of positives for the RBNZ to acknowledge, but we wouldn't be surprised if Governor Wheeler attempts to roll out his own brand of 'forward guidance'," BNZ analysts said in a note.
"This could weigh on the NZD through a lower NZ-US interest rate differential," they said, adding that this could prod the kiwi down towards $0.7700.
New Zealand government bonds rose on Monday, pushing yields 3 basis points lower along the curve.
Australian government bond futures bounced off multi-week lows with the three-year bond contract up 3 ticks to 97.010. The 10-year contract gained 4 ticks to 95.900.
Comments
Comments are closed for this article.