Aussie & NZD dollars higher on EU zone optimism

The Aussie rose as high as $1.0351 from $1.0281 late in New York on Friday, as shorts were squeezed. Aussie fell 2.4 pct last week amid talk of a euro zone break up.

Last at $1.0308 with hourly trend resistance at $1.0370. A break above would clear the way to $1.0405. Support seen at $1.0250.

Firmer euro lifts risk appetite across the board, including Asian stocks and commodity currencies. Korean and Singapore shares gain more than 1.5 pct.

But sentiment remains very fragile and dominated by Europe.

The NZ dollar edges higher to $0.7887, from $0.7857 in NY on Friday, having recovered from a one month-low of $0.7677 struck last week.

Kiwi spiked to a session high of $0.7930 following stronger-than-expected retail sales data.

Kiwi support seen at $0.7850 with strong resistance at 200-day moving average at $0.7995 and then $0.8000.

Markets sceptical as strong Q3 retail sales boosted by the Rugby World Cup held in NZ in Sep/Oct, thus unlikely to sustain.

Rate outlook little changed, with pricing of tightening over next 12 months around 15 bps, up around 4 bps.

Improved risk appetite and talk of further intervention by Japanese authorities send the Antipodeans higher against the yen.

Kiwi up 0.5 percent at 60.89 yen, up from a one-month low of 59.93 yen struck on Friday. Aussie at 79.55 yen , well-off a three-week trough of 77.99 yen hit last week.

Kiwi a touch firmer against the Aussie after the retail sales data, with the Aussie at NZ$1.3056 vs NZ$1.3081.

NZ government bond prices softer, sending yields 2.5 basis points higher along the curve. Swap yields about 2 bps higher on retail.

Australian debt futures also retreat, with the three-year debt contract down 0.08 points at 96.470, and the 10-year 0.05 points lower at 95.790.

Copyright Reuters, 2011