The Australian dollar erased most of its losses against the greenback on Friday in a dramatic mid-session turnaround after a two-percent rally in Shanghai stocks took the sting out of worries about more tightening by China.
The kiwi also pared losses, but struggled to make any headway after an unexpected drop in a measure of core retail sales bolstered views the Reserve Bank of New Zealand will be in no hurry to lift interest rates. The Aussie last stood at $0.9856, little changed on the day. It fell as low as $0.9839, before a spike took it to a session high of $0.9892.
The Aussie was also choppy against the yen, rising to a session high of 82.10 yen from a low of 81.72, before relinquishing all the gains to last stand at 81.75. But the euro outperformed, rising to near two-month highs at A$1.3693.
Against the kiwi, the Aussie reached its best level in a week, touching NZ$1.3076 as it continued to recover from a slide to a six-week low of NZ$1.2812 on January 14. The New Zealand dollar limped off 3-week lows of $0.7525 to last trade at $0.7545, but held below $0.7580 seen late in New York on Thursday.
"The Aussie is already fading, so it looks like the short-term market wants to continue selling it," said Grant Turley, strategist at ANZ. Immediate resistance for the Aussie is seen at $0.9896, the 50 percent retracement of the November to December rally, while support looms at around $0.9800, the January 12 low.
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