Economic news

Australia, New Zealand dollars rise on U.S. stimulus hopes

USYDNEY (Reuters) - The Australian dollar rose on Wednesday after four straight sessions of losses took it to a three-week trough while its New Zealand peer was also slightly firmer as optimism over a pre-election U.S. fiscal stimulus powered risk assets.

The Australian dollar, a liquid proxy for risk, jumped 0.4% to $0.7075 after going as deep as $0.7021 on Tuesday.

The New Zealand dollar climbed 0.4% to $0.6609.

Risk assets got a boost on news the White House and Democrats have moved closer to agreement on a new coronavirus relief package as President Donald Trump said he was willing to accept a large aid bill.

The Aussie had been on a downward trajectory in recent days on bets the country’s central bank will cut its cash rate further to 0.1% in November and expand its bond-buying programme.

Earlier, preliminary data on retail sales showed a drop of 1.5% for September on top of a 4% decline in August, suggesting consumers were paring spending.

However, the quarterly figure was up a solid 6.8% from a year ago, which means private consumption likely made a positive contribution to third-quarter gross domestic product growth.

Separate data showed, job vacancies rose by over 6% last month with gains in each state and territory, though job ads are still 12.2% below the level in September 2019.

“The recovery path remains bumpy, but the economic recovery is well underway,” said Craig James, chief economist at CommSec. “There are more jobs to be filled and retail spending remains solid.”

“The Reserve Bank is keen on adding momentum to the recovery with more monetary stimulus. The aim is to get more people back into work and back quickly,” James added.

With risk assets on the rise, safe-haven bonds saw some selling pressure.

New Zealand government bonds fell, with yields up 5-6 basis points at the long-end of the curve.

Australian government bond futures slipped, with the three-year bond contract down half tick at 99.83. The 10-year contract dropped 5 ticks to 99.19.

Editing by Sam Holmes

Source: Reuters

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