Aussie, New Zealand dollars rally as market bets on Greece

WELLINGTON/SYDNEY: The Australian and New Zealand dollars recovered further on Wednesday as stocks and commodities gained on hopes Greece would pass austerity measures and so avert a default, at least for now.

The Aussie rises to $1.0542 early, from $1.0441 in late local trade on Tuesday. Aussie now aiming for $1.0602, after bursting through the $1.0500 level overnight.

NZ dollar follows the Aussie up to a five-day high of $0.8125, before steadying around $0.8117. The kiwi, which hit a 26-year peak of $0.8301 earlier this month, is still seen trapped in the $0.8000/$0.8200 range.

The Aussie/kiwi pair steady around New Zealand dollar 1.2984, well above a two-week low of New Zealand dollar 1.2851 struck on Friday.

Global equities and the euro up on bets that an impending vote on Greece's budget and a France-led plan to roll over Greek debt will save the country from a default. Forecast-beating results from Nike Inc also helped sentiment.

The first Greek vote is due sometime in their afternoon, with a further vote on the laws on Thursday.

Commodities also flock to risk-on trade, with the CRB index up 1.7 pct, gold, copper and oil prices all rising.

Aussie makes a big break on the yen as short sellers were caught out, rising 1.2 percent to 85.36 and clearing resistance at 85.34. Next target the June 15 high of 86.40.

The lessening in risk aversion sparked profit-taking in Australian bond and bill futures after recent hefty gains. December bill futures slid 0.08 points from a near four-month peak.

Interbank futures retreated as investors reconsidered bets that the Reserve Bank of Australia (RBA)might have to cut interest rates in coming months.

The RBA has been steadfastly upbeat on the outlook for the domestic and Asian economies, warning that rates are more likely to rise than fall.

No major data due in Australia, while New Zealand expects building and business confidence surveys on Thursday.

New Zealand bond yields follow US Treasury up, with local yields up around 4 bps. Benchmark 10-year Treasury yields rising to 3.05 pct, from 2.93 pct on Tuesday, hurt by improved risk sentiment and a weak five-yr note auction.

Australian bond futures lower with the three-year down 0.09 points at 95.330 and the 10-year contract 0.085 points lower at 94.845.

Copyright Reuters, 2011