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Australia, NZ dollars gain as global growth pulse quickens

Published 05/01/2017, 01:34 pm
Updated 05/01/2017, 01:40 pm
© Reuters.  Australia, NZ dollars gain as global growth pulse quickens

By Wayne Cole

SYDNEY, Jan 5 (Reuters) - The Australian and New Zealand dollars hopped to their highest in more than two weeks on Thursday, as a round of profit-taking curbed the U.S. dollar, while a run of upbeat data on the global economy underpinned commodity prices.

A survey on China's services sector showed activity sped to a 17-month high in December, echoing strength in a range of surveys from Europe and the United States. Aussie dollar AUD=D4 was flat $0.7285 AUD=D4 , having rallied 0.9 percent overnight as its U.S. counterpart retreated broadly. Chart resistance lay just ahead at $0.7299, with support around $0.7240/50.

Dealers said the U.S. dollar had enjoyed a strong run in the last couple of months and the market was heavily long on the currency, leaving it vulnerable to a sudden pullback on very little news.

Indeed, minutes of the Federal Reserve's last policy meeting out on Wednesday should actually have been bullish for the currency given they showed many policymakers saw a risk they might have to raise interest rates faster to head off inflation.

The Aussie also drew direct support from recent strength in prices for its main commodities, notably iron ore and coal.

The Reserve Bank of Australia's index of commodity prices out this week showed it surged 9.3 percent in December, from the previous month, to be up almost 40 percent on a year earlier.

The index for bulk commodities alone was up 85 percent on December 2015, a windfall for export revenues, mining profits and tax receipts.

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The New Zealand dollar NZD=D4 was holding at $0.6977 having climbed 0.8 percent overnight, but faces tough chart resistance in the $0.7000/7006 zone.

A dearth of domestic data has seen it track to the whims of the U.S. currency in recent days. The next major release is not until Jan. 26 when the consumer price index for the December quarter is released.

The country's central bank holds its next policy meeting on Feb. 9 and is considered certain to keep rates at 1.75 percent, with the market wagering it will remain there for much of the coming year.

New Zealand government bonds 0#NZTSY= rose in price for a second session, with yields falling as much as 8 basis points at the longer end.

Australian government bond futures also firmed, with the three-year bond contract YTTc1 up 3 ticks at 97.970. The 10-year contract YTCc1 added 4.5 ticks to 97.2150. (Editing by Jacqueline Wong)

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