WELLINGTON/SYDNEY: The New Zealand and Australian dollars firmed on Friday after the US currency took a knock when ratings agency Standard and Poor's warned the United States' credit rating might be cut if there is no deal on the government's debt ceiling.
The New Zealand dollar edges higher in thin trade to $0.8434, compared with $0.8410 in New York. It hit a fresh 30-year high of $0.8507, on Thursday after data showed surprisingly robust economic growth.
Support seen at $0.8400 and below that $0.8370 with $0.8480 the likely to cap the topside ahead of a renewed move above $0.8500. The kiwi, which gained more than 1 pct this week, ranks among the word's top 3 performers.
Commodity currency boosted after GDP data suggests New Zealand economy is picking up momentum that may cause a rate hike sooner to choke off inflation pressures.
Reuters poll taken before GDP data showed next interest rate move for early 2012, but market thinking may shift to December this year or possibly even October.
The news prompted investors to favour the kiwi against its Aussie neighbour on the likelihood that the Reserve Bank of New Zealand (RBNZ) will raise rates faster than its counterpart in Australia. Aussie dips to $1.2723, inches away from a 7-month trough of NZ$1.2655.
The Australian dollar nudges higher against the USD at $1.0734, from $1.0717 in New York, well-off a two-month high of $1.0807 hit on Tuesday. Resistance first at $1.0813, with support seen from $1.0692.
The US dollar was weighed by news that S&P warned of one-in-two chance it could cut the US credit ratings if there was no deal soon on the debt ceiling.
Market awaits European bank stress tests due later on Friday which could force some to seek state aid.
A data-free day on Friday with investors looking ahead to next week, with New Zealand Q2 inflation data due on Monday and migration figures on Thursday. Australia sees RBA minutes on Tuesday and trade prices on Friday.
New Zealand government debt prices weaker sending yields as much as 3 basis points higher.
Australian bond futures weaker, with the three-year contract down 0.04 points at 95.510, while the 10-year contract off 0.06 points at 95.015.
Copyright Reuters, 2011
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