Economic news

AUD, NZD Slightly Firmer, Post Weekly Gains

The Australian dollar held its head above 73 U.S. cents while its New Zealand counterpart was on track for its sixth straight session of gains on Friday against a sagging greenback which was weaker on downbeat economic data.

The Australian dollar was last at $0.7316 and was on track to post a small weekly gain.

The New Zealand dollar rose 0.5% to $0.6790, and was up a solid 1.9% so far this week. It hit a two-week high of $0.6785 after Finance Minister Grant Robertson sounded positive about the economy's recovery prospects in television interviews.

Both countries have been successful in controlling their second waves of coronavirus infections, while keeping overall case numbers and death toll low relative to global standards.

In addition, greater investor risk appetite amid expectations of a faster global economic recovery led by China has boosted the antipodes, analysts said.

“It is notable that despite the recent weakness in equities, China demand proxies like copper and iron ore have gone moonshot and so has Asia FX with USD/CNH making new cycle lows. And this has led to the AUD/USD outperformance,” said AxiTrader strategist Stephen Innes.

The Aussie is often traded as a liquid proxy for the Chinese yuan, which is at its highest since early May against the greenback.

Weighing on the U.S. dollar, the latest data showed jobless claims remained elevated at 860,000, while both housing starts and the Philadelphia Fed business index fell. The dollar was on track for a 0.3% weekly loss against a basket of major currencies.

Elsewhere, the Aussie is down 1.4% so far this week against the kiwi, trading around its lowest since early August at 1.0772.

Jason Wong, senior markets strategist at Bank of New Zealand sees strong technical resistance for the pair at 1.1350-1.14 led by the possibility of negative NZ interest rates and greater balance sheet expansion by the Reserve Bank of New Zealand.

“Although difficult to predict, current relative commodity price trends are also in favour of the AUD,” Wong added, referring to strong prices for iron ore and coal.

New Zealand government bonds were little moved.

Australian government bond futures slipped, with the three-year bond contract off 3.5 ticks at 99.705. The 10-year contract eased 4.5 ticks to 99.06.

Editing by Ana Nicolaci da Costa

Source: Reuters

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