SYDNEY/WELLINGTON: The Australian and New Zealand dollars were heading for their best daily gain in about two weeks on Thursday, thanks in part to calmer equity markets across Asia and dovish comments from the European Central Bank.
Diminishing worries about China's liquidity crunch as money market rates dipped further added to the improving risk sentiment, setting the scene for a solid bounce in the Antipodean currencies into quarter-end.
Demand for government bonds was also strong in line with gains in US Treasuries, after a surprisingly sharp downward revision to economic growth helped ease worries the Federal Reserve will soon dial down its asset-buying programme.
The Aussie rose 0.5 percent to $0.9320, having scaled a one-week high of $0.9345 overnight. It looked to have formed an interim base near $0.9200, following an 11 percent plunge in the past two months.
Good support was seen around $0.9140, near a 33-mth trough set at the start of the week and the 38.2 percent retracement of its 2012-2013 rally.
"Some easing in funding tensions among China's banks has helped the AUD, with the currency showing encouraging signs of stabilisation over recent days," said Mitul Kotecha, Global Head of FX Strategy at Credit Agricole.
"However, its limited progress is still a long way from becoming a sustained rally," he said.
Dramatic political developments which resulted in former leader Kevin Rudd returning as prime minister barely registered on investors' radar.
If anything, it could be viewed positively by some as it ended constant chatter of leadership challenge.
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