WELLINGTON/SYDNEY: The Australian dollar climbed to three-week highs on Thursday, boosted by strong domestic jobs data which suggest the country's economy may be in better shape than many had thought.
The Aussie jumps 0.4 percent on the day to $0.9967, its highest since mid-May, after Australia posted an unexpected rise in employment for May.
The New Zealand dollar edges up to a three-week high of $0.7717, supported by strength in the Aussie, while the high-beta currency was also bolstered by gains in global share markets, which suggested that market sentiment was improving.
Given a string of strong Australian economic data, market participants have pared back expectations on how far and fast interest rates might fall.
Interbank futures now imply an 80 percent chance of another 25 bps cut in July, having been more than fully priced for a move earlier in the week.
Aussie government debt futures extend their retreat from Monday's historical highs. The three-year contract is 0.080 points lower at 97.630, while the 10-year contract ease 0.050 points to 97.00.
Aussie, kiwi also boosted as speculation of more US economic stimulus and optimism of a Spanish bank rescue improve market sentiment and fuel demand for the high-risk currency.
The Aussie climbs 0.5 percent versus the yen to hit a two-week high around 79.05 yen, while it also rallies versus the euro. The Australian unit climbs roughly half a percent to the day's high of NZ1.2928.
The Aussie adds to its rally from Wednesday, when a much stronger-than-expected first quarter growth data forced a rethink on the prospect of further aggressive interest rate cuts, which spurred a short-covering rally.
Market participants see the rally continuing further, adding that the Aussie could test parity with the US dollar in the near term.
Sentiment boosted after US Federal Reserve Vice Chair Janet Yellen laid out the case for the US central bank to ease monetary conditions further to shield a fragile economy as financial turmoil in Europe mounts.
Investors awaited a speech by Fed Chairman Ben Bernanke later in the day for more clues into whether it more easing may be in store.
"Investors are looking out for hints the Fed is now considering additional quantitative easing (QEIII)," BNZ analysts say in a note. "Any such hints would undermine US bond yields and the USD, further underpinning the NZD/USD."
BNZ sees the possibility of a near-term rise in the kiwi to $0.7760, where sellers could come in.
The Aussie's break above initial resistance at $0.9935, the May 22 high, opens the door to $1.0016, the May 15 high.
Antipodeans also supported after European Central Bank Governing Council member Ewald Nowotny says any Spanish request to tap European bailout funds would be a "reasonable option" that could help restore trust in the country's banking sector.
Still, analysts warn that markets will remain choppy, with risk assets vulnerable to further falls if European officials are seen dragging their feet in preventing the euro zone debt crisis from deteriorating further.
New Zealand government debt prices fall, sending yields as much as 7 basis points higher across the curve.
Comments
Comments are closed for this article.