WELLINGTON/SYDNEY: The Australian dollar slipped on Monday after disappointing data bolstered the case for the central bank to stay on the sidelines for longer, while a general rise in risk appetite helped lift the New Zealand currency.
The Aussie dollar shed nearly half a cent to around $1.0722 after data showed retail sales fell 0.6 pc in May, against expectations for a 0.3 percent increase.
"There was even some expectations from some parts of the market that retail sales might print closer to 1 percent, hence the sharp reaction in the Aussie dollar. We saw it sell off quite quickly right on that announcement," said Jim Vrondas, head of client dealing at OzForex.
"We're of the view the Aussie dollar is looking like running out of steam between $1.08 and $1.10 and of the view that we'll see a retest of initial support at $1.04, probably followed by $1.0250, our target for this third quarter."
The Aussie last stood at $1.0714, having dipped to a session low around $1.0712. Risk sentiment was also hit by a warning from Standard & Poor's that some debt rollover plans for Greece would put it in selective default.
Still, it has retained most of last week's 2.8 percent gain. Immediate support is seen at $1.0668, the June 30 low, with resistance near $1.0800.
Other Australian data out on Monday showed a 7.9 percent fall in building approvals versus the median forecast for a 0.7 pc decline. But offsetting that is a report showing job advertisements rose by the most in over a year in June.
Interbank futures edged up as the sales data reinforced expectations the Reserve Bank of Australia (RBA) will keep rates at 4.75 percent at its July policy meeting on Tuesday.
That would mark eight months since the last rise in rates, and many investors are betting they will stay on hold for the rest of the year as well.
Australian bond futures also rose with the three-year contract gaining 0.08 points to 95.220, the 10-year adding 0.06 points to 94.775.
The Aussie also fell against the yen and slid about 0.5 percent on the kiwi. It last stood around NZ$1.2931.
The New Zealand dollar traded around $0.8281, poised for a likely assault on last week's 26-year, post-float high of $0.8320. The high forms the first topside barrier for the kiwi.
Diminishing euro-zone debt fears and a recent trend towards solid local data have fuelled the kiwi, changing the short-term outlook from bearish to bullish, said Westpac senior markets strategist Imre Speizer.
"The $0.8000 major support level survived two decent attempts, against our expectations, and there should be another push higher this week above the 0.8320 high," Speizer said in a note to clients.
The kiwi is looking for three pieces of local data for directions this week, Speizer said, citing the NZIER's quarterly survey of business opinion on Tuesday, Fonterra's dairy auction on Wednesday and the quake-delayed released of first-quarter GDP on Thursday.
Earlier on Monday, a survey showed prices for New Zealand's key export commodities ended their nine-month record setting run, slipping 1.2 percent during June.
Asian equities rallied on Monday after euro zone finance ministers on Saturday approved a 12 billion euro instalment of Greece's bailout, and following upbeat US manufacturing activity data.
Copyright Reuters, 2011
Comments
Comments are closed.