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Risk Sentiment Supports AUD, Whereas NZD Up After Jobs Data

SYDNEY, Feb 3 (Reuters) - The Australian dollar traded slightly higher on Wednesday, recovering some of the previous day’s losses against the greenback as improving risk sentiment supported the currency despite moves by the central bank to buy more government bonds.

The Aussie was trading 0.04% higher at $0.7610 in the afternoon, from its $0.7608 level in the previous session, amid improved market sentiment in Asia about the economic recovery prospects of countries around the world.

“We’ve seen a good rebound in risk sentiment after a strong rally in US shares overnight,” said Steven Dooley, APAC currency strategist at Western Union Business Solutions. “Asian equity markets are higher and this has been supporting the AUD.”

Reserve Bank of Australia (RBA) Governor Philip Lowe said in a speech on Wednesday the dollar had been a factor the bank’s decision to hold its cash rate at 0.1% and expand its current bond buying program by another A$100 billion ($76.35 billion) on Tuesday.

“It’s clear these bond purchases have helped to lower interest rates, and they have meant the Australian dollar is lower than it otherwise would have been,” Lowe said in Canberra, Australia’s capital. “So it’s worked.”

“If we were to cease bond purchase in April, it’s likely that there would be unwelcome upward pressure on the exchange rate.”

The Aussie has solid chart support around $0.7600 and remains short of the January peak of $0.7819.

Yields on 10-year paper were higher at 1.14%, from 1.096% following the RBA’s pledge to buy more bonds on Tuesday.

Across the Tasman, the Kiwi dollar was trading 0.39% higher at $0.7218, after the jobless rate dropped unexpectedly to 4.9% from 5.3%, dampening prospects for further central bank rate cuts.

New Zealand bonds have not fared so well amid speculation that the Reserve Bank of New Zealand (RBNZ) was done easing and monetary tightening may be back sooner thane expected, given strength in domestic demand and house prices.

Yields on 10-year paper edged up to 1.360%, the highest since March 20.

(Editing by Christian Schmollinger)

Source: Reuters

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