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Markets

Australia, NZ dollars near 1-wk highs, eyes on US jobs data

  • New Zealand government bonds fell with yields about two basis points higher across the curve.
Published May 7, 2021

SYDNEY: The Australian and New Zealand dollars held near one-week highs on Friday as risk appetite was whetted by surging commodity prices and expectations of a strong US jobs report later in the day.

The Australian dollar went as high as $0.7792, a level last seen on Apr. 29. By 0600 GMT, it was off 0.1% at $0.7775, well above its 10-day moving average of $0.7763 where key chart support now lies.

The next stop for the Aussie is $0.7815.

For the week, the Aussie is up 0.8% so far.

The New Zealand dollar was a shade weaker at $0.7231 before hitting a one-week top of $0.7243. The kiwi is up nearly 1% this week.

The Aussie has been supported by a strong rally in the prices of Australia's top export earner, iron ore.

Futures of the key steel making ingredient vaulted to a record high on Friday pushing spot prices to the highest-ever above $200 a tonne.

London copper prices, too, hit a record high on Friday.

The antipodean currencies, traded as a liquid proxy for the Chinese yuan, were also boosted by impressive trade data from China which showed import growth hitting a decade high.

China's imports of iron ore are up 6.7% this year so far while those of natural gas has surged more than 22%. Both commodities are Australia's top export earners.

Earlier, the Reserve Bank of Australia (RBA) upgraded forecasts for the country's economy, though inflation and wages growth are seen lagging in a sign monetary policy will remain highly accommodative for years to come.

Later in the day, US payrolls data is expected to confirm the economy's solid path to recovery from the pandemic, with economists expecting 978,000 new US jobs for April, after bumper gains of 916,000 in March.

The unemployment rate is expected to fall to 5.8% from 6.0% in March.

Next week, Australia's government will release its 2021/22 budget outlook on Tuesday where it will unveil a record deficit but is still likely to keep its spending tap open to help support jobs and growth.

New Zealand government bonds fell with yields about two basis points higher across the curve.

Australian government bond futures were mixed, with the three-year bond contract flat at 99.740.

The 10-year contract rose 1.5 ticks to 98.3650.

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