Markets

Aussie & kiwi hold gains on USD, await China data

Published August 23, 2012 Updated August 23, 2012 01:03am

* But Aussie, kiwi subdued versus the euro, as a climb in the single currency to a seven-week high versus the broadly weak dollar prompts investors to cut bets for euro weakness versus the Antipodeans.

* Aussie at $1.0497, from around $1.0440 in late local trade on Wednesday, after minutes show the Fed may announce more quantitative easing "fairly soon" in the absence of a considerable improvement in the economy

* Kiwi pushes up to a two-week high of $0.8146 from $0.8080 late in the local session. Traders expect the Antipodeans will extend gains if Australasian investors also dump the dollar.

* Aussie not helped by commnets from Australia's resources minister that the Mining boom was over. That followed a cautious outlook from miner BHP Billiton on Wednesday.

* The US dollar fell as some investors are taken by surprise at the Fed's increasingly dovish tone. It hits a seven-week trough versus the euro, as more stimulus might involve flooding the market with additional US dollars.

* Euro hits a five-week high around A$1.1960, before edging back to A$1.1919. Touches four-week high around NZ$1.5440. Aussie, kiwi also dip versus the yen, which powers higher versus the US dollar.

* Markets await HSBC data on Chinese manufacturing activity due later in the day, which may pose downside risks for the Antipodeans. A further contraction in PMI could add to the view that Chinese economic growth is slowing, which may curb demand for Australian, New Zealand commodity exports.

* Aussie offers around $1.0530/40 may cap further gains, traders say, while support at $1.0411, builds after the currency held above that level on Wednesday.

* Market participants also anticipate kiwi offers around $0.8145 could provide an obstacle to any significant upside, while support holds at $0.8080, roughly around lows hit consecutively in late July and early August.

* Australian, New Zealand government bonds track US Treasuries higher. The three-year Australian contract indicated 0.080 points higher at 97.320, while the 10-year contract climbs 0.085 points to 96.790.

* New Zealand government bonds also edge up, prodding yields 2 basis points lower across the curve.

Copyright Reuters, 2012