SYDNEY: The Australian and New Zealand dollars were hanging onto much-needed weekly gains on Friday as investors awaited word from the US Federal Reserve on its tapering plans, which could decide if their rally lives or dies.
Much depends on what Fed Chair Jerome Powell might say on tapering in a keynote speech later on Friday, with any hint of hawkishness likely to send the US dollar higher once more.
The Aussie had edged back to $0.7241, from the week’s top around $0.7280, which is proving to be stiff resistance. It was up 1.4% for the week, but that follows a 3.2% dive the week before and the trend was still downward.
Likewise, the kiwi dollar had faded a little to $0.6949 from a peak of $0.6983, but was still up 1.4% for the week so far. That was comfortably above the recent 10-month trough of $0.6807, but a break of $0.7000 was needed to improve the technical background.
“The A$ appears to be capped by key resistance between $0.7270 and $0.7290, and we still see an eventual move down towards $0.7000,” said Richard Franulovich, Westpac’s head of FX strategy.
“We remain sceptical of a move higher, given the sharp acceleration in domestic Covid cases and rising domestic restrictions.”
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