Markets

Aussie & NZ dollar march higher, EU bailout plan helps

Published Updated

The Aussie lunges to $1.0070, from $1.002 in New York, having amassed gains of over 3 pct since Friday.

Aussie lifted by another monster capex number, up 12.3 pct in Q3, far exceeding a forecast of 8.3 pct. The big rise should be a key driver for Q3 GDP.

Still, the RBA could cut rates next week at its December monetary policy meeting given the risks in Europe.

Interbank futures imply an 84 percent chance of a 25 basis points cut to 4.25 percent on Dec. 6 and a total easing of 144 bps by May.

Aussie benefits from a bolstered EFSF, with a sort of bond insurance vehicle that would provide partial protection on new bonds issued by a requesting EU member.

Proposals to expand funding for the IMF, so it could lend to troubled members like Italy, also viewed as risk positive.

Support at $0.9950, with major resistance at $1.0077, the daily cloud base, ahead of $1.0080 -- the 38.2 pct Fibo of the $1.0753/$0.9664 move.

Australia's private credit growth slowed to 0.2 pct, vs a forecast of 0.4 pct. Annual growth in mortgage lending has slowed to 5.7 pct, from a double-digit pace of the previous decade.

Aussie debt futures gave back some of their recent hefty gains with the three-year contract down 0.083 points at 96.780, and the 10-year contract dipping 0.034 points to 95.960.

The NZ dollar edges up to $0.7654, from $0.7623 in late NY trade. It has gained around 2.5 pct so far this week. Support seen at $0.7560, with resistance at $0.7677.

Kiwi also helped by building approvals data, which showed a rebound in October, albeit from a low base. That follows an increase in business confidence survey this week, the first one in four months. and

Still, markets remain cautious on outlook, pricing in an 11 pct chance of a 25 bps rate cut next week and 5 bps over the next yr.

Euro plunges to multi-week lows vs the Antipodeans. Euro hits a one-month trough at A$1.3329, five cents lower in just one week. Last at A$1.3254. Euro reaches two-week lows at NZ$1.7430, down 4 pct since Nov 14.

The Antipodeans keep clawing their way higher against the safe-haven yen. The Aussie firm at 78.05 yen, off a seven-week low of 74.72 hit last week. The kiwi was up at 59.47 yen.

NZ government bonds softer amid profit taking and improved sentiment, with yields 4 basis points higher along the curve.

Copyright Reuters, 2011