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Australia dollar bolstered by China stock rebound, Greek worries fester

Published 13/07/2015, 02:45 pm
© Reuters.  Australia dollar bolstered by China stock rebound, Greek worries fester

By Charlotte Greenfield and Gyles Beckford

SYDNEY/WELLINGTON, July 13 (Reuters) - The Australian dollar steadied on Monday helped by a rebound in Chinese stocks, but gains were capped by uncertainties over whether near-bankrupt Greece can secure fresh funding.

The Aussie dollar was little changed at $0.7437 AUD=D4 , holding off a six-year trough of $0.7372 set last Wednesday. It was flat against the safe-haven yen at 91.29 AUDJPY=R .

"Chinese equities are still up so it's helping to give an underpinning to the Aussie dollar today," said Mitul Kotecha, head of FX strategy for Asia at Barclays. The Aussie dollar is often used as a proxy for China plays.

Trade data from China also provided some support with exports unexpectedly picking up in June, while imports fell less than feared. ID:nL4N0ZT1MY

"But the fact that there's been no conclusion about Greece at this stage has kept investors on the sidelines and for that reason we're seeing the Aussie dollar being sidelined as well," Kotecha added.

Hopes for some resolution to the Greek drama were dashed on Sunday when euro zone leaders told the cash-strapped country it must enact key reforms this week to restore trust before they will open talks on a financial rescue. ID:nL5N0ZS09X

The New Zealand dollar NZD=D4 was still looking brittle at $0.6707 as the continuing Greek debt saga left investors nervous and risk averse.

"We expect the New Zealand dollar to remain sensitive to risk appetite, but continue to see potential for a strong squeeze higher in the event of a deal being struck," said BNZ currency strategist Raiko Shareef in a note.

Near term support is seen initially around $0.6675 with resistance at $0.6750.

New Zealand's inflation data is due on Thursday with expectations that prices rose 0.6 percent in the three months to June 30, although the annual inflation rate would only be 0.4 percent, which would leave the Reserve Bank of New Zealand open to cut rates next week to 3.0 percent. NZ/POLL

New Zealand government bonds 0#NZTSY= traded with an offered tone, sending yields up to 4 basis points higher at the long end of the curve.

Australian government bond futures also eased, with the three-year contract YTTc1 losing 5 ticks to 97.970. The 10-year contract YTCc1 dropped 7 ticks to 96.9450. (Editing by Jacqueline Wong)

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