Australia, NZ dollars bounce on upbeat data, Trump comments

13 Apr, 2017

The Australian dollar got an added boost from upbeat readings on employment at home and trade in China where both exports and imports beat expectations.

The Aussie was last up 0.7 percent at $0.7576 having been snatched away from a three-month low of $0.7473 hit on Wednesday.

The New Zealand dollar had climbed to $0.6997, from a one-month trough of $0.6910 the previous day, aided by strong manufacturing data..

Much of the gains came overnight after Trump launched his protest against a high U.S. dollar and added a comment that he favoured low U.S. interest rates. The dollar duly fell across the board while U.S. bond yields reversed lower.

A further lift came with news Australian employment rose 60,900 in March, three times what the market had forecast. All the gains came in full-time work which jumped 74,500 after a long period of underperforming.

Analysts cautioned the data could be erratic from month to month, but on the face it of would help soothe recent concerns at the Reserve Bank of Australia (RBA) that the labour market might be weakening.

"Given the degree of focus on employment data, we see risks of some further near term strength towards $0.7600, but view strength into the $0.7600/50 zone as an opportunity to sell," said Robert Rennie, global head of market strategy at Westpac.

He noted bond futures had come off only slightly on the job numbers in part because the unemployment rate remained at a 13-month peak of 5.9 percent.

"Unemployment is high enough for the market to keep RBA rate pricing unchanged for the foreseeable future, and that will keep  short-term bonds supported," he said.

The three-year Australian government bond future was still up 3 ticks at 98.240 having reached its highest since mid-November. The 10-year contract gained 5 ticks to 97.5200.

New Zealand government bonds likewise rallied, sending yields as much as 8 basis points lower at the long end.

Copyright Reuters, 2017
 

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