Economic news

Australia, NZ dlrs highest since 2018 on vaccine rush

SYDNEY, Dec 3 (Reuters) - The Australian and New Zealand dollars were both near their highest since 2018 on Thursday as investors wagered the imminent arrival of coronavirus vaccines would help spur a global economic recovery in coming months.

The Aussie stood at $0.7411 having finally cracked the September top of $0.7413 to touch $0.7420, a level not seen since August 2018. The next major targets are $0.7500 and $0.7677, a peak from June 2018.

The kiwi dollar paused at $0.7057, after reaching its highest since April 2018 at $0.7084. There is not a lot of chart resistance now until $0.7150.

Britain approved a COVID-19 vaccine on Wednesday, jumping ahead of the rest of the world in the race to begin the most crucial mass inoculation programme in history.

Australia has already had considerable success in suppressing the virus, but a vaccine would allow for the resumption of international travel and support activity worldwide, giving a boost to commodity prices.

The domestic economy has fared better than many with growth rebounding 3.3% in the third quarter.

The upbeat news continued on Thursday with Australia’s trade surplus easily topping forecasts at A$7.5 billion ($5.55 billion) in October, thanks in large part to higher prices and shipments of the country’s number one export - iron ore.

The data also showed that diplomatic discord with China had not had a major impact by October as goods exports to the Asian giant rose to A$12.7 billion, the highest in four months and up 13% on October last year.

“The trade tensions with China are clearly concerning,” said Belinda Allen, a senior economist at CBA. “But while these impacts can be large for the businesses involved, in a macroeconomic sense it is unlikely to impact the economic recovery we expect in 2021 unless it escalates further.”

“China imports 90% of its iron ore, with 60% from Australia and 20% from Brazil, making this relationship hard to disentangle,” she added.

The improving global outlook has been a drag on sovereign bonds, with Australian 10-year yields climbing to a three-month top at 1.02% before steadying at 0.999%.

Buying by the Reserve Bank of Australia (RBA) has contained three-year yields at 0.13%, near the central bank’s 0.1% target, thus steepening the yield curve.

($1 = 1.3512 Australian dollars)

(Editing by Ana Nicolaci da Costa)

Source: Reuters

 


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