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Australia dollar struggles near 3-month high, NZ dollar pauses

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The Australian dollar stayed near a three-month high on Monday but fizzled again at the crucial 77 US cents barrier after repeatedly failing to breach the key chart resistance point and amid broader greenback strength.

[SYDNEY] The Australian dollar stayed near a three-month high on Monday but fizzled again at the crucial 77 US cents barrier after repeatedly failing to breach the key chart resistance point and amid broader greenback strength.

The Australian dollar held at US$0.7667, after rising as far as US$0.7689 on Friday when it climbed 0.7 per cent.

The Aussie has traded in a sideways direction since the beginning of February, failing persistently at the US$0.7700 mark. Analysts expect the struggle to continue, pending the release of important economic data later this week.

"While employment on Thursday is the most important monthly data point for traders, the release of NAB monthly business survey is the key for me," said Greg McKenna, chief market strategist at Axitrader.

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"That's because it gives us not only a window into business confidence across the nation but also into the actual conditions businesses are reporting."

The Aussie is already up more than 6.5 per cent this year thanks to resurgent iron ore, Australia's biggest export earner, and on an upbeat assessment of the economy by the country's central bank.

A string of recent data also showed the A$1.6 trillion (S$1.75 trillion) economy likely averted a recession in the December quarter after a shock contraction in the third quarter of last year.

Technical analysts say a breach above US$0.7700 could see the Aussie hitting US$0.7740 and then US$0.7770/80.

Elsewhere, the Aussie paused against its New Zealand counterpart after scaling a more than four-month peak on Friday.

On the euro, it was at its highest since April 2015 while it held at a one-year top on the yen.

In contrast, the New Zealand dollar hovered around two-and-a-half week lows, struggling to recover after the country's central bank signalled it will keep rates at record lows for two years..

The Kiwi stood at US$0.7190 on Monday, inching up from US$0.7172 hit last week after the Reserve Bank of New Zealand (RBNZ) cited growing global uncertainty for its downbeat outlook.

The Kiwi tumbled 1.5 per cent last week, its worst performance since the week of Dec 16.

However, analysts expect the Kiwi to pick up on strong domestic growth, thanks to robust migration and a revival in the price of milk, New Zealand's biggest goods export earner.

"The RBNZ has clearly knocked the NZD lower... however, we still find it difficult to get overly bearish on the NZD given a still solid economic picture," said Philip Borkin, senior economist at ANZ.

New Zealand government bonds eased, sending yields 4.5 basis points higher at the long end of the curve.

Australian government bond futures were mixed, with the three-year bond contract up one tick at 98.050. The 10-year contract slipped one tick to 97.2650.

REUTERS

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