WELLINGTON/SYDNEY: The Australian dollar hit a fresh 26-year high against a broadly weaker sterling on Friday, while the New Zealand dollar held near a 30-year peak on the greenback as risk appetite improved after upbeat US private-sector employment data.
Risk sentiment had been further bolstered by the European Central Bank's pledge to continue providing liquidity to Portugal, despite this week's downgrade to junk status by Moody's.
But trading was subdued ahead of US non-farm payrolls data. Forecasts had been for a modest 90,000 increase, but surprisingly strong gains in private-sector jobs have some economists bumping up their forecasts.
The risk, of course, is the job numbers disappoint and knock back risk appetite again, Joseph Capurso, strategist at Commonwealth Bank.
The Aussie dollar last stood at $1.0771 versus $1.0770 late in New York, holding in a very slim $1.0758/76 range so far. Support is seen at $1.0680, with the next hurdle being option-related offers around $1.0800 and stops at $1.0810.
For the week, it was little changed, consolidating last week's 2.8 percent rally -- its best performance since March.
Against sterling, the Aussie touched a fresh 26-year high around A$1.4780 per pound after the Bank of England left rates at a record low on Thursday and was seen on hold for the rest of the year due to the weak UK economy.
There was no local data, and markets barely batted an eyelid at a speech by Reserve Bank of Australia assistant governor Debelle, who said he was unconcerned by the country's perennial current account deficit.
"Nothing relevant to monetary policy, hence no reaction in rates or fx markets," noted Roland Randall, strategist at TD Securities.
Australian three-year bond future edged 0.03 points lower to 95.220, while the 10-year contract slipped 0.025 points to 94.765.
Interbank futures were also a touch softer and implied a 32 percent chance of a rate cut by year-end, reflecting concerns about the international economy, though that compared with 50 percent earlier in the week.
The RBA is still seen with a bias to tighten interest rates over time and an August hike might still be on the cards depending upon the Q2 CPI report due later in the month.
NZD NEAR 30-YR HIGH
Meanwhile, the NZ dollar was last at $0.8318, having hit a 30-year high of $0.8344, when it pushed through stop-loss levels. On the week, the kiwi was up 0.4 percent, adding to last week's 2.5 percent rally.
"It's done nothing since hitting the high. It sagged, then went sideways as nothing is going on ahead of payrolls," said Imre Speizer, senior markets strategist at Westpac.
A strong number could provoke a kiwi assault on the $0.84 level, last seen in November 1981. Support for the kiwi starts at $0.8250 with resistance at $0.8350 and then $0.8370.
A dearth of local data was also partly responsible for the kiwi's lacklustre performance. However, next week the market will have electronic card sales and real estate figures for June, and the delayed first quarter GDP release to contend with.
Copyright Reuters, 2011
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