Markets

Aussie, NZ dollars hit one-week highs on weak USD

Published Updated

* Aussie last at $1.0670 , having risen as high as $1.0682. Resistance seen at $1.0699, a level representing the 38.2 pct retracement of the May 2 to May 17 fall.

* The selloff from a 29-year peak of $1.1012 looks to have ended with some traders expecting the Aussie to trade in a range between $1.0500-$1.0900 for now.

* Versus the kiwi, Aussie trades at NZ$1.3467 , struggling to make much headway after climbing off a two-week trough of NZ$1.3341 on May 12.

* NZ dollar at $0.7915, having hit a peak of $0.7938 in offshore trade, pulling further away from a five-week low of $0.7755 plumbed on Monday.

* Support seen around $0.7844, then $0.7755 with resistance sitting around $0.7939, ahead of $0.7995.

* Kiwi rose on Thursday after the NZ government unveiled plans to cut spending and sell assets to balance its budget over the next four years, a year earlier than market expectations, easing the risk of a credit-rating downgrade.

* US dollar under pressure after weak homes sales and factory activity data show the world's biggest economy stuck in low gear and two top Fed officials signal the Fed is in no hurry to unwind its ultra-easy policy.

* The low US interest rate has encouraged investors to use the dollar as a funding currency to buy higher-yielding assets which have helped lift the Aussie, kiwi and commodities in the past few months.

* Euro little changed against both the Aussie and kiwi at A$1.3415 and NZ$1.8088 with markets watching to see whether Greece will restructure its debt.

* ECB has raised the stakes in its bid to prevent a restructuring of Greek debt by telling governments it would refuse to accept the bonds as collateral in the event of such a move.

* No major data due in Australia, while migration survey for April is expected in NZ.

* NZ government debt prices flat, while Australian bond futures are slightly higher, with the three-year contract up 0.01 point at 94.980, and the 10-year contract up 0.015 points at 94.670.

Copyright Reuters, 2011