SYDNEY: The Australian dollar finally cracked resistance to reach three-week peaks on Friday as the mood in global markets thawed a little and high energy prices put an extra gloss on resource-linked currencies.
A US Senate deal to extend the debt ceiling eased one immediate worry for investors, who were also counting on a solid payrolls report later in the day.
That helped the Australian push up to $0.7324 and clear a major chart barrier at $0.7305/16 that has held since mid-September. Resistance is now layered at $0.7348, $0.7375 and $0.7408.
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The New Zealand dollar was up a fraction at $0.6940, after a whippy week saw it fail a test of $0.6980 resistance before bouncing from support at $0.6876.
Lofty prices for liquefied natural gas, coal and oil were a positive for the Aussie as Australia is a major energy exporter and is now routinely boasting record trade surpluses month to month, bringing a natural flow of cash into the currency.
The domestic outlook had also brightened as the rapid pace of vaccinations meant New South Wales state was due to ease COVID-19 lockdown restrictions from next week, followed by Victoria later in October.
"Australia should reassert its favourable position in 2022 as we reach 90% full vaccination of the adult population, pitching us close to being a world leader," said Westpac chief economist Bill Evans.
"Activity will be supported by the unleashing of consumer pent-up demand, the sizeable savings buffer of households, an optimistic mood, and considerable policy stimulus," said Evans, who is forecasts GDP growth of 5% for next year.
He sees the Aussie recovering to around $0.7500 by the end of this year and peaking at $0.7800 in 2022.
One drag on the Aussie has been the very dovish stance of the Reserve Bank of Australia (RBA) which held rates at 0.1% at its policy meeting this week and reiterated that no hike was likely until 2024.
While there has been pressure to tighten to restrain a runaway housing market, the central bank has put the onus on macro prudential tools instead.
The Reserve Bank of New Zealand (RBNZ) is far ahead, having raised rates this week for the first time in seven years, though the move was so well flagged it had scant impact on the kiwi.
The market is now focused on whether it will hike again in November, with swaps implying a 79% chance.
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