SYDNEY: The Australian and New Zealand dollars held near multi-week highs on Tuesday amid hopes for a rebound in China’s reopening economy, while breaks of major chart levels drew bids from momentum funds.
The Aussie stood at $0.6907, having hit a five-month peak of $0.6950 overnight.
It now faces resistance at an August top of $0.7009 and a chart target at $0.7136, while support lies at the 200-day moving average around $0.6840.
It also climbed to a three-week top on the Japanese yen at 91.82 after clearing resistance at 91.05.
The kiwi dollar had levelled out at $0.6364, after reaching a one-month top of $0.6411. Its bull target is a high from December at $0.6513.
The US dollar has been under pressure as markets scale back expectations for a Federal Reserve rate rise, with futures now heavily favouring a quarter-point move in February rather than 50 basis points.
The local market also slightly favours a quarter-point hike from the Reserve Bank of Australia (RBA) to 3.35%, with some chance it may pause for the first meeting since May.
Australian dollars hits four-month high, breaks major resistance
The probabilities could be changed by data on monthly consumer prices and retail sales for November due on Wednesday.
Inflation is seen popping back up to an annual 7.3% after a surprise pullback in October, while retail spending is forecast to rise a solid 0.7% thanks to major sale events in the month.
A survey from ANZ out Tuesday showed its measure of consumer sentiment bounced 4.9% last week, but was still at historically low levels. Encouragingly, there was also a sharp 0.9% drop in inflation expectations to 5.0%.
“Household inflation expectations eased significantly from the last print of 2022, suggesting cautious optimism about lower inflation through 2023,” said ANZ senior economist Adelaide Timbrell.
A run of softer inflation figures globally has helped Australian three-year bond yields fall sharply over the past week to 3.31%, well off a December top of 3.56%.
New Zealand two-year swaps have dropped around 31 basis points in the same time to reach 5.11%.
However, the strength of domestic inflation means markets are still priced for another 125 basis points of rate hikes by the Reserve Bank of New Zealand to 5.50%.