WELLINGTON/SYDNEY: The Australian and New Zealand dollars bounced from multi-month lows on Friday as the US dollar rally fizzled ahead of a speech by Federal Reserve Chair Janet Yellen.
The Australian dollar nudged up to $0.9305, having recovered from $0.9229, its lowest since early June. It was on track to end the week where it started, a resilient performance given the weakness of Chinese numbers.
"Everyone is focused on Yellen and we expect her to be dovish," said Joseph Capurso, a strategist at Commonwealth Bank of Australia. Yet the market was already so priced for a dovish speech that its impact could be fleeting, he added.
Yellen is due to speak later on Friday at the annual gathering of central bankers in Jackson Hole, Wyoming.
European Central Bank President Mario Draghi will also be giving a speech. Underpinning the Aussie was demand from carry trade investors, borrowing in yen to buy higher yielding Aussie assets.
The Australian dollar climbed to its highest in more than a year at 96.69 yen for a gain of 1.4 percent this week, the largest increase in nearly five months.
A move above the key resistance of 96.50 yen combined with 5, 10 and 20-day moving averages pointing north are strong positive signals, with dealers eyeing a move to 98.15, the 61.8 percent retracement of its 2013 fall.
Immediate resistance was found at 97.36, with support at 96.43.
Also helping the Aussie was a broadly weak pound which fell as far as A$1.7796, the lowest in four months. The pound has dropped 2 percent in August, largely due to disappointing economic data in Britain and doubts over the timing of a rise in interest rates.
The New Zealand dollar had a tenuous hold on $0.8400 after finding some respite from the heavy selling that sent it to five-month lows. Yet, it was still on track to show a weekly decline of 1 percent.
Again the modest bounce might have been due to positioning ahead of Yellen's appearance. "One view is that the Yellen speech may dial things back a bit, will be less hawkish and the market may have anticipated that and taken some profit," said Westpac senior currency strategist Imre Speizer.
However, it is not seen as offering much relief from the pressure that has seen the kiwi tumble from last month's near three-year high of $0.8839.
"Any rise is just a temporary correction in a bigger trend down to $0.8200 in the next few months," Speizer said. Near term support for the kiwi is seen at about $0.8350, with resistance at $0.8415.
Next week sees second-tier local data including July overseas trade, food price inflation and building consents. The kiwi did manage a modest bounce on the neighbouring Aussie dollar, which eased to NZ$1.1075 from a nine-month peak.
New Zealand government bonds had a mild bid tone, sending yields 1.5 basis points lower across the curve. Australian government bond futures were mostly unchanged, with the three-year bond contract down one tick at 97.310. The 10-year contract added half a tick to 96.535.
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