The Australian and New Zealand dollars came up for air on Friday, underpinned by gains on the Swiss franc and euro and an improved view on risk assets as Wall Street surged. The Australian dollar was up at around $0.8169, from a low of $0.8117 on Thursday. That was not far from a 4-1/2-year trough of $0.8107 and it was still on track for a fall of 1 percent since Monday, its fifth week of losses.
The Antipodean currencies found unexpected help from a sliding Swiss franc after Switzerland's central bank imposed negative interest rates on deposits to slow the currency's rise following Russia's deepening financial troubles. The Aussie held at 0.8004 Swiss francs, having jumped more than 1 percent Thursday. The kiwi was up at 0.7614 francs, after it leapt 1.5 percent.
The euro also fell back sharply as speculation intensified that the European central Bank would finally embark on full quantitative easing next month. The common currency dropped to A$1.5021 from a peak of $1.5331. Still, charts remain bearish for the Aussie with next major support found at $0.8066, the mid-2010 low. Commonwealth Bank of Australia (CBA) cut its AUD/USD forecast sharply to $0.7800 by mid-March from $0.8600. CBA expects the US dollar to strengthen in response to an improved US economic outlook and the prospect of Federal Reserve tightening by mid-2015.
The New Zealand dollar rose to $0.7780, clawing back from a one-week low of $0.7682 plumbed on Thursday. Meanwhile, ongoing weakness in global commodity prices and elevated market volatility will likely hold investors back from taking on big positions in riskier currencies, including the kiwi, as trading winds down into the year-end. A flare-up in risk aversion could knock the kiwi back towards a 2-1/2-year low of $0.7609 hit last week, and pave the way for a test of $0.7500.
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