WELLINGTON/SYDNEY: The Australian and New Zealand dollars consolidated near multi-week highs against most currencies on Wednesday, a very respectable performance given the huge falls seen early in August when market turmoil was at its worst.
The Aussie dollar last traded at $1.0695, having touched a four-week high around $1.0721 overnight. While that was down from $1.0980 at the start of the month, it was far above the deep $0.9924 trough touched on Aug. 9.
The local currency lost some 3 percent over the month, but traders expect the Aussie to resume its upward momentum, helped in part by strength in commodities.
Grant Turley, strategist at ANZ, sees the Aussie returning to $1.08-$1.09 as he expects both the United States and Europe to inject more liquidity with some form of easing to stimulate economic growth.
"Maybe the developed world doesn't look so great, but in Asia, which is more important to Australia now, things are looking bright," he said, adding he is confident that business investment and retail sales data on Thursday will be positive for the Aussie.
Major resistance for the Aussie lies around $1.0786, the Aug. 3 high, with support at $1.0624, the 55-day moving average.
The Antipodeans have outperformed the greenback on expectations of more US stimulus. Those views were bolstered by minutes of the Federal Reserve's last meeting, which showed some members had favoured further action then.
"Players look increasingly comfortable buying the Australian and New Zealand dollars on dips," said Westpac senior strategist Imre Speizer.
The New Zealand dollar last traded at $0.8541, not far off a four-week peak around $0.8559 set overnight. In the near term, support is seen at $0.8480, with $0.8576 the first line of resistance.
On the month, the kiwi is down 2.9 percent. Market turbulence of the past three weeks has tempered its stellar 24 percent rise from a 6-month trough of $0.7125 in March to a 30-year high of $0.8842 in early August.
The Aussie and kiwi also held at four-week highs against the euro, Swissy and pound.
Markets generally shrugged off Australian and New Zealand data on Wednesday with attention focused on offshore developments.
Australia's private sector credit rose an expected 0.2 percent in July, while annual growth in housing credit was the slowest on record, adding to the case for the Reserve Bank of Australia to keep its 4.75 percent rates on hold next week.
A Reuters poll showed a majority of economists expect steady rates in September. Still, interbank futures imply a one-in-five chance of a cut in September, and 79.5 basis points worth of easing by December.
In New Zealand, August business confidence showed firms still strongly optimistic about their own outlook, but less positive over the next 12 months, with inflation expectations also rising. See
A private economic think tank, the NZ Institute of Economic Research, trimmed its growth forecasts for the next two years because of the weaker global outlook, which it said should prompt the central bank to defer any rate rises until the middle of next year. See
New Zealand second quarter terms of trade data is due on Thursday with expectations of a rise of 2 percent on the previous quarter driven by sturdy export prices.
NZ debt closed with a mild bid tone, pushing up prices a couple of ticks. Australian bond futures also gained, with the 3-year contract up 0.04 points to 96.190 and the 10-year 0.04 points higher at 95.620.
Copyright Reuters, 2011
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