You are here
Australia, NZ dollars hover near 2-month highs on sterling
[SYDNEY] The Australian and New Zealand dollars held near two-month highs against the pound on Tuesday ahead of a speech by Prime Minister Theresa May that could set Britain on course for a "hard Brexit".
Sterling was on the defensive at A$1.6117, having touched a two-month trough below A$1.60 in the previous session. It plunged 3.5 per cent last week, the biggest fall since June last year.
Ms May will say Britain will not seek a Brexit deal that leaves it "half in, half out" of the European Union, according to her office.
Investors have been concerned that leaving the single market would hurt exports and foreign investment.
Against the New Zealand dollar, the pound ticked up to NZ$1.6952, after dropping 1.3 per cent to a two-month low of NZ$1.6833 in the previous session.
Meanwhile, the antipodean currencies stayed near recent peaks versus their US counterpart.
The Australian dollar stood at US$0.7469, having repeatedly met stiff resistance above 75 US cents.
The Aussie has benefited in recent weeks from rising iron ore prices, boosting the country's exports and national income, making it the best performing major currency so far this month.
Analysts see significant chart support at US$0.7460.
"But we are still seeing resistance at US$0.7525 ... suggesting that it will take a bit more than rallying iron ore prices to crack that nut," said Stephen Innes, senior trader at OANDA Australia and Asia Pacific.
Analysts were also circumspect about the near-term trends once Donald Trump is inaugurated as the president of the United States on Friday. "If Trump maintains his protectionist mantra and targets China, for example, we may find that AUD/NZD fall as Australia is their (China's) largest trade partner," said Matt Simpson, senior analyst at ThinkMarkets.
The New Zealand dollar came off a one-month high of US$0.7149 against the greenback to stand at US$0.7102.
New Zealand government bonds eased, sending yields 1 basis point higher.
Australian government bond futures were down too, with the three-year bond contract off 2 ticks at 97.99. The 10-year contract dipped 1 tick to 97.26.