Australia, NZ dollars seesaw on Brexit, US stimulus news

SYDNEY: The Australian and New Zealand dollars seesawed on Wednesday as a report of a possible Brexit deal was offset by an unexpected roadblock to the long-awaited US stimulus package.

The Aussie had edged higher when an ITV reporter tweeted a Brexit deal could be struck on Wednesday. The cheer was muted when President Donald Trump said he wanted Congress to amend the coronavirus aid bill.

That left the Aussie a fraction firmer at $0.7529, off its recent 2-1/2 year peak of $0.7639. Chart support comes in around $0.7510 and $0.7463.

Some profit taking would be natural given the currency is ahead a solid 8% for the year, but more importantly up a massive 36% from the trough hit during the market madness of mid-March.

The kiwi dollar was flat at $0.7034, down from its recent top at $0.7170. It is up 4.5% for the year so far and almost 24% from the March low of $0.5703.

"Technically, AUD/USD and NZD/USD remain vulnerable to a short-term pullback towards $0.7310 and $0.6880, respectively - a 50% retracement of their November/December uptrend," said Elias Haddad, a senior currency strategist at CBA.

There was hopeful news on the coronavirus domestically with New South Wales reporting only 8 new cases as a lockdown in the north east of Sydney looked to be limiting the outbreak.

The lockdown is a blow to an economy which has been recovering strongly in recent months as a revival in consumer spending buoyed the jobs market.

Data out Tuesday showed retail sales surged past all expectations in November as online discounts boosted demand for electronics and household goods.

NAB economist Tapas Strickland noted average sales in the fourth quarter were running 2.7% ahead of the previous quarter, while hours worked were likely to rise by 3.25%.

"Both suggest a strong Q4 GDP print even if there is a decline associated with the unwind of Black Friday/Cyber Monday and from some impact from the Sydney virus cluster," he added.