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Markets

Australia, NZ dollars regain footing on firmer commodities

  • The commodity-linked Aussie climbed 0.38% to $0.7163 by 0355 GMT recovering some of its steep losses last week
Published August 23, 2021

SYDNEY: The Australian and New Zealand dollars pulled away from 9-month lows struck last week, as buoyant sentiment in equity and commodity markets offset worries over rising COVID-19 infections and extended lockdowns in both countries.

The commodity-linked Aussie climbed 0.38% to $0.7163 by 0355 GMT recovering some of its steep losses last week, which saw it reach a nine-month low of $0.7106 on Friday, as iron ore prices tumbled.

The New Zealand dollar was ahead by a more modest 0.06% at $0.6842 by 0414 GMT. Its next support level is around the $0.6807 reached on Friday, also a nine-month low. Resistance is at around $0.7000 and $0.7040.

Asian stocks and base metals prices were higher on Monday as hopes of an improvement in demand rose after China, the world's top metals consumer, reported no new locally transmitted COVID-19 cases for the first time since July.

"The Antipodean currencies are likely to remain driven by global risk sentiment," Barclays Bank analysts said.

Australia Prime Minister Scott Morrison said the country would have to start easing strict COVID-19 restrictions once vaccination rates increase, even as rising infections in its main cities keep over half of its population under lockdowns.

Meanwhile, New Zealand Prime Minister Jacinda Ardern extended a strict nationwide lockdown that was due to end Tuesday, until Friday, saying the current COVID-19 outbreak of the infectious Delta variant had not yet peaked.

"The longer the lockdown, the less convinced interest rate markets will be that the RBNZ (Reserve Bank of New Zealand) will soon tighten the cash rate," said analysts at Commonwealth Bank of Australia.

Bonds were little changed, with New Zealand yields stable across the curve. Yields on 10-year Australian debt were two basis points higher but still trading near its 2021 trough at 1.096%, remaining 17 basis points below US yields.

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