SYDNEY/WELLINGTON: The Australian and New Zealand dollars held up relatively well on Wednesday, but were pretty much sidelined as investors were on the look out for possible moves to curb the strength of the Swiss franc.
Aussie last at $1.0452 vs 1.0472 late in New York, having traded in a slim range between $1.0433 and $1.0486 so far. Support seen around the $1.0410 area, with resistance pegged near $1.0520, Monday's high.
Traders say the market is waiting to see what actions the Swiss authorities will take to weaken the franc. The Swiss government is due to meet on Wednesday to discuss how to help the country deal with the ill effects of a strong franc.
The Aussie showed no reaction to data showing wages rose 0.9 percent in the second quarter, bang in line with expectations.
Against the New Zealand dollar, the Aussie is at NZ$1.2540 , down from Monday's peak of $1.2649.
Aussie rates markets are still wagering the RBA will be forced to cut rates, even though the bank had considered tightening early this month.
Interbank futures are softer on the day, but still pricing in a 76 pct chance of a 25 bps cut at next month's meeting. Market has a total of 135 bps worth of easing discounted over a 12-month period.
The New Zealand dollar at $0.8331, off slightly from New York's $0.8362. It is hemmed in a tight range between$0.8313 to $0.8355. Kiwi seen supported at $0.8290, with resistance gathered around $0.8385.
The kiwi not knocked by the fourth consecutive decline in dairy prices at Fonterra's auction. Dairying is New Zealand's biggest export earner.
NZ's Q2 wholesale inflation measure is driven higher by fuel prices and to a lesser extent cost of raw materials for the strong dairy sector. Input prices rise 0.9 percent, while output prices gain 1.4 percent pointing to some rebuilding of margins. See
The NZ central bank bases rates policy on consumer prices but the PPI will be regarded as another sign of growing inflation pressures. Analysts still backing prospect of at least a 25 basis point rate rise in Sept. 15 monetary statement, despite the market turmoil and global risks of the past week.
NZ government debt prices firmer, sending yields down as much as 4 basis points.
Australian bond futures also rise, with the 3-yr contract up 0.05 points at 96.210 and the 10-year up 0.055 points at 95.550.
Copyright Reuters, 2011
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