Australia, New Zealand dollars jump on global commodity bandwagon

[SYDNEY] The Australian and New Zealand dollars were on a roll on Friday (Oct 15) as a boom in global commodity prices boosted resource-leveraged currencies, while an Australia state flagged the return of international travel as early as Nov 1.

The Aussie was enjoying the view at US$0.7424, after climbing to a 5-week high of US$0.7426 overnight. That left it up 1.6 per cent for the week, while the break of resistance at US$0.7408 opens the way to a test of the September top at A$0.7478.

The kiwi did some catch-up with a spike to a 3-week peak of US$0.7041, having finally cracked resistance at US$0.6980. It was up 1.5 per cent for the week so far and aiming for the next chart barrier at US$0.7093.

The Aussie extended its sudden bull run against the yen to reach a 4-month high of 84.36. That was a gain of 2.9 per cent for the week, the biggest such rise since June last year.

It also notched a 5-month top on the euro, which shed 1.1 per cent on the week.

Global strength in resource and energy prices has been boosting commodity currencies and weighing on the yen in particular as Japan is a major energy importer.

"The squeeze on industrial metals and energy continues, with many metals and coal at multi-year highs," said Westpac FX strategist Sean Callow. "Oil and gas exporters lead G10 currencies so far in October."

He noted the jump in the Aussie would have wrongfooted many speculators who had built big short positions in the last few weeks when the focus was on a slowdown in China.

Domestically, Australia was also well on the way to having one of the most vaccinated populations in the world, with 84 per cent of adults having had at least one dose.

This had led to an easing of lockdowns in Sydney and Canberra, with Melbourne soon to follow.

Indeed, the state government of New South Wales on Friday surprised many by announcing fully-vaccinated international travellers would be allowed to fly into Sydney from Nov 1 without having to quarantine.

A resumption of tourism, even limited, would be positive for a sector hard hit by the closure of the country's borders.

In the bond market, there was some reprieve as yields backed off to 1.6 per cent after hitting a 6-month peak of 1.8 per cent early in the week.

Local bonds have underperformed Treasuries recently, with spreads widening out to +12 basis points from -9 basis points a month ago.

REUTERS