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Australian, New Zealand dollars proving resilient after rough week

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The Australian and New Zealand dollars were ending a tough week on an upbeat note on Friday as Chinese data beat expectations despite the ongoing tussle over tariffs, while a lull in the equity rout helped risk appetite in general.

[SYDNEY] The Australian and New Zealand dollars were ending a tough week on an upbeat note on Friday as Chinese data beat expectations despite the ongoing tussle over tariffs, while a lull in the equity rout helped risk appetite in general.

The Australian dollar was hovering at US$0.7122, having bounced 1 per cent overnight. It was also holding a gain of 1 per cent for the week so far, a solid performance given it hit a 32-month trough of US$0.7041 just a few days before.

It now faces stiff chart resistance in the US$0.7130/40 zone ahead of a retracement target at US$0.7176.

Beijing on Friday reported September exports were up 14.5 per cent on a year earlier to handily top forecasts, while imports rose a robust 14.3 per cent. [

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The numbers suggested the Chinese economy was proving resilient to the Sino-US dispute, a positive for Australia as one of its largest suppliers of commodities.

Demand from the Asian giant kept prices for iron ore and coal firm through the week even as equities sagged.

"Commodity prices suggest AUD/USD should push higher and there are calls in Chinese media for fiscal stimulus to support growth as Chinese exporters struggle with US tariffs," said Westpac senior FX analyst Sean Callow.

"But it may be hard for the Aussie to recover above US$0.72 if equity markets remain jittery."

The mood had already been cheered by reports US President Donald Trump and Chinese President Xi Jinping plan to meet at the G-20 summit in Argentina in late November.

There were also reports the US Treasury had not labelled China as a currency manipulator in its semiannual report on foreign exchange rate practices, removing one potential source of friction between the powers.

The Reserve Bank of Australia (RBA) cited international trade tensions as one of many risks to the economy in its semi-annual review of the financial system released on Friday.

A slowdown in China and contagion from emerging markets were also concerns, while domestically the bank highlighted the risks from falling home prices, high debt levels and tightening lending standards on mortgages.

The New Zealand dollar was looking a little steadier at US$0.6517, having risen 1.2 per cent for the week so far and away from the recent low of US$0.6433. It faces plenty of resistance around US$0.6540 and US$0.6576, however.

New Zealand government bond prices gave back some safe-haven gains, leaving yields around 3 basis points higher across the curve.

Australian government bond futures dipped, with the three-year bond contract off 2 ticks at 97.870. The 10-year contract fell 1 tick to 97.2450.

REUTERS