SYDNEY: The Aussie hit a five-month peak on Monday on the back of a soft US dollar, which has been constrained by a meteoric rise in the Taiwanese currency, while the kiwi also gained ground ahead of the quarterly jobs data this week.
There has been muted reaction to the astonishing win of the centre-left Labor Party in Australia on Saturday, which would allow the government more scope to pass legislation and ramp up fiscal spending if the US trade war poses any threat to the economy.
The Aussie hit a five-year top of $0.6481, although it pared some gains and was last up 0.3% at $0.6460.
It also breached key resistance of the 200-day moving average at $0.6457 in a bullish move. The kiwi dollar nudged up 0.4% to $0.5969, after ending last week with a small drop of 0.3%.
It remains still short of the recent peak of $0.6029 which is the near-term resistance.
In the broader market, the US dollar was losing ground as a meteoric surge in its Taiwanese counterpart spilled over elsewhere, fuelling speculation some Asian countries were prepared to engineer revaluations to win US trade concessions.
Down Under, the National Australia Bank revised up its outlook for the Australian dollar, forecasting that it would rise to 70 cents by the year end, mostly due to a weaker US dollar.
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Sally Auld, chief economist at NAB, expects the government’s share of economic activity in Australia to increase over the next three years as Labor is likely to take the election result as a strong mandate.
“However, we expect the government’s agenda to proceed largely as it has in the first term; that is, relatively cautiously and adhering to a ‘no surprises’ policy,” said Auld.
This week’s economic calendar in Australia is a bit thin, but New Zealand will publish its quarterly jobs data on Wednesday where expectations are for a further tick up in the unemployment rate to 5.3% from 5.1% in the fourth quarter.
The Reserve Bank of New Zealand will also publish its biannual Financial Stability Report on Wednesday.
The central bank is 75% priced to cut interest rates by another quarter-point later this month, with a total of three more cuts expected this year.
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