WELLINGTON/SYDNEY: The Australian dollar powered up on Wednesday and dragged the kiwi higher as well after Australian economic data pointed to solid economic growth in the second quarter, cooling interest rate cut expectations.
Aussie up 0.8 pct on day at $1.0577, having hit a session peak of $1.0585, after stops were triggered above $1.0555. Next level of resistance at $1.0625, the 55-day MA with support at $1.0482.
Interbank futures fall as much as 0.14 points as markets trim the chance of deep rate cuts. Markets push back to November the first fully priced cut and imply a total easing of 68 bps by year-end, well down from over 160 bps last month.
Australian bond futures dive with the three-year contract down 0.15 points at 96.190. The 10-year skids 0.115 points to 95.670, off a 2.5-year peak set earlier this week. The contract is implying a yield of 4.330 pct.
GDP grew surprisingly strong in Q2, up 1.2 pct, topping forecasts of a 0.9 pct rise, as households spent more than expected and miners rebuilt stocks.
Ahead of the GDP data, RBA Governor Glenn Stevens said it was best for monetary policy to stay steady in times of great global uncertainty, another sign that rates could be on hold for months.
Markets have been betting that concerns over global growth would push the central bank into easing policy.
Against the kiwi, the Aussie leaps to two-month high of NZ$1.2820. Last trades at NZ$1.2807.
Kiwi tracks Aussie higher to $0.8252, from $0.8215 in late New York trade. Support at $0.8212 and then $0.8162, while resistance comes in around $0.8325.
Global risk aversion has put pressure on the kiwi this week, down 2.3 pct, while the Aussie has lost 0.2 pct.
Kiwi holds nears 5-month peak against the Swissy, after SNB set a limit on how much its currency can gain. Last at 0.7082 francs , having jumped 8 pct offshore.
Antipodeans hold on to offshore gains on a broadly weaker yen with markets wary that Japan could follow the Swiss. Aussie at 81.45 yen , one yen higher from Tuesday and the kiwi at 63.85 yen from 63.43.
Kiwi not helped by a sixth consecutive decline in prices at Fonterra's global dairy auction, with the average price down 1.4 percent, virtually wiping out this year's price gains. See
NZ Q2 wholesale trade data and manufacturing sales have both been delayed a week, leaving on offer just electronic card numbers due Friday.
NZ government bonds retreat after solid gains earlier this week. Local yields up 8 bps along the curve.
Copyright Reuters, 2011
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