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Australia dollar holds ground, NZ dollar saddled with election uncertainty
[SYDNEY] The Australian dollar clung above a key chart level of 80 US cents on Wednesday, while its New Zealand cousin retreated as investors braced for the outcome of a looming general election which has suddenly turned into a knife-edge contest.
The Australian dollar held at US$0.8024, having pulled back from last week's 2-1/2 year peak of US$0.8125.
The Aussie is likely to remain between its 10-day moving average of US$0.8002 and Tuesday's high of US$0.8049, with commodity prices largely determining its near-term outlook, analysts said.
"The Aussie has stayed above 80 cents in recent days, it shows the resilience of the currency," said NAB forex strategist Rodrigo Catril.
"We have seen a little bit of wobble in iron ore and copper prices, but they have stabilised. We need to see how that plays out to know if they remain supportive for the Aussie."
Copper hit a three-year high of US$6,970 a tonne last week but has since been on a slippery slope. Iron ore, Australia's single biggest export earner, has rebounded after a five-day slide.
Data provided some support to the Aussie with consumer sentiment rising in September on growing optimism about the economic outlook. Confidence remains below long-term average though, as indebted households fret over their finances.
The New Zealand dollar held at US$0.7273, after briefly touching US$0.7321 on Tuesday when a poll implied support for the country's ruling National Party had surged after earlier surveys had showed a dramatic rise in fortunes for the opposition Labour Party.
An average of polls released on Wednesday showed Labour was not too far behind, underlining the uncertainty over the make-up and policies of the next government.
"There was a bit of a reality check this morning that this is just one poll and polls are not reliable," NAB's Catril said.
"We're still going to get a bit of volatility, not just ahead of the elections but after the elections too."
New Zealand government bonds slipped, sending yields up about five basis points at the long end and three basis points at the short-end.
Australian government bond futures eased, with the three-year bond contract down 3.5 ticks at 97.960. The 10-year contract fell three ticks to 97.3300.