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Australia, NZ dlrs off 10-mth peaks on Fed speculation, Singapore easing

Published 14/04/2016, 01:28 pm
© Reuters.  Australia, NZ dlrs off 10-mth peaks on Fed speculation, Singapore easing
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By Cecile Lefort and Rebecca Howard

SYDNEY/WELLINGTON, April 14 (Reuters) - The Australian and New Zealand dollars eased from 10-month peaks on Thursday after optimism about global growth gave investors an excuse to trim bearish U.S. dollar positions, as it raised chances that the Federal Reserve will increase interest rates.

Also undermining the Antipodean currencies was a surprise policy easing by Singapore's central bank, citing a tougher outlook for economic growth. Australian dollar AUD=D4 eased to $0.7645, from a high of $0.7717 on Wednesday. Support was found at $0.7596.

Even a healthy labour force report failed to lift the mood. Australia's unemployment rate fell to 5.7 percent, its lowest since late 2013. ECONAU

That led the futures market 0#YIB: to lengthen the odds of a rate cut, at least for the next few months.

The Aussie still held solid gains against the euro, which dropped to A$1.4684 EURAUD=R . The common currency has slipped 5 cents in one week, while the pound hovered near its lowest since January 2015 at A$1.8515 GBPAUD=R .

The New Zealand dollar NZD=D4 dropped nearly 1 percent on the day to $0.6860, and away from a peak of $0.6952 touched on Wednesday. Support was found at $0.6773.

Much of the move had to do with investors warming up once again to the idea of more tightening by the U.S. Federal Reserve.

But for now the policy easing by the Monetary Authority of Singapore was a worrying sign for countries across Asia, according to Westpac analyst Sean Callow, who noted Singapore had now returned policy to where it was during the depths of the global financial crisis.

"As one of the world's most trade-sensitive economies, Singapore's concern over a "less favourable external environment" should be noted by the likes of the RBA and RBNZ," he said.

Both the Reserve Bank of Australia (RBA) and the Reserve Bank of New Zealand (RBNZ) are under pressure to ease again, in part because of the recent strength of their currencies.

Inflation figures from New Zealand due next week could provide a trigger for a move there.

"A low headline inflation starting point...is on the face of it another tick in the box for a lower cash rate, and sooner rather than later," ANZ economists said in a research note.

New Zealand government bonds 0#NZTSY= gained, sending yields 1 basis point lower.

Australian government bond futures extended losses on the jobs data, with the three-year bond contract YTTc1 off 5 ticks at 98.070.

The 10-year contract YTCc1 shed half a tick to 97.4800, while the 20-year contract YXXc1 was steady at 96.8900. (Editing by Simon Cameron-Moore)

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