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UPDATE 1-Australia dlr recovers after RBA, NZ dlr hits 3-month peak

Published 06/06/2017, 04:10 pm
Updated 06/06/2017, 04:20 pm
© Reuters.  UPDATE 1-Australia dlr recovers after RBA, NZ dlr hits 3-month peak
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(Add reaction post RBA monthly policy statement)

By Cecile Lefort

SYDNEY, June 6 (Reuters) - The Australian dollar recouped earlier losses on Tuesday after the central bank stuck to its optimistic outlook for the economy, despite the likelihood of a soft reading on first-quarter growth.

The New Zealand dollar scaled a three-month peak on broad weakness in its U.S. counterpart.

The Australian dollar AUD=D4 was firm at $0.7492, having recovered from a session low of $0.7457. Resistance was found at Monday's high of 75 cents and a break above would target $0.7517 touched last week.

The Reserve Bank of Australia (RBA) kept rates at a record low of 1.5 percent at its monthly policy review and affirmed its neutral bias.

"The AUD rose because the RBA maintained its forecast for GDP growth of "a little above 3 percent" over the next couple of years despite flat expectations for Q1 GDP," said Elias Haddad, a senior strategist at Commonwealth Bank of Australia.

Australia's first quarter gross domestic product data is due on Wednesday. The median forecast from a Reuters poll predicts growth of 0.2 percent in the first quarter from the previous period, with some analysts seeing a small contraction. ECONAU

Earlier on Tuesday, the Aussie had dropped a third of a U.S. cent after news Australia's current account deficit narrowed to A$3.1 billion in the first quarter. That was the smallest shortfall since 2001 but disappointed forecasts for a balanced outcome. the debt markets, interbank futures 0#YIB: imply a one-in-five chance of a rate cut by December, while a majority of economists forecast steady interest rates until September 2018.

Across the Tasman Sea, the New Zealand dollar NZD=D4 reached $0.7162, the highest since early March. Resistance was found around $0.7167.

It has gained more than three cents since mid-May, largely thanks to solid economic data at home and an upbeat outlook for dairy, New Zealand's top export earner.

New Zealand government bonds 0#NZTSY= gained, sending yields 3.5 basis points lower.

Australian government bond futures were mixed, with the three-year bond contract YTTc1 up 1 tick at 98.310. The 10-year contract YTCc1 also gained 1 tick to 97.5900, while the 20-year contract YXXc1 shed 1 tick to 97.0050.

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