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Australia, NZ dlrs off lows but still under pressure

Published 11/04/2017, 01:09 pm
Updated 11/04/2017, 01:10 pm
© Reuters.  Australia, NZ dlrs off lows but still under pressure
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By Swati Pandey and Charlotte Greenfield

SYDNEY/WELLINGTON, April 11 (Reuters) - The Australian dollar came off a three-month trough in quiet trading on Tuesday, after a measure of business conditions jumped in March to its highest since the global financial crisis.

The Australian dollar AUD=D4 briefly rose to $0.7514, bouncing off strong chart support of $0.7476 touched on Monday.

The Aussie has been on a downtrend since mid-March against a resurgent greenback, due in part to rising geopolitical tensions. A recent drop in the price of iron ore and coal, Australia's biggest export earners, hasn't helped, either.

"It is good to see the Aussie regaining support," said Greg McKenna, chief market strategist at AxiTrader.

"When the Aussie hit a low yesterday, buyers moved in swiftly and pushed it back higher. That suggests genuine buying from those watching the support level."

Earlier, the National Australia Bank's NAB.AX monthly survey of more than 400 firms showed its index of business conditions climbed 6 points to +14 in March, well above the long-run average of +5. in the week, traders will watch out for Westpac's consumer sentiment on Wednesday, and the Reserve Bank of Australia's (RBA) Financial Stability Report and February jobs data on Thursday. ECONAU

The RBA has highlighted softness in the labour market as a key area of concern and if the unemployment rate moves above 6 percent it would revive pressure for another rate cut. The central bank has left rates at a record low 1.50 percent after easing in August last year. New Zealand dollar NZD=D4 hovered at $0.6945, after touching a four-week low of $0.6921 on Monday.

The Kiwi has lost 4.7 percent since the beginning of February as investors became more jittery during a period of increased global uncertainty.

The country's central bank has also quashed any thought of a rate hike this year, shrinking the kiwi's yield advantage over the U.S. dollar.

"Broadly speaking, we believe the NZD/USD has transitioned from a 'buy the dip' to a 'sell the rally' currency," said David Croy, senior rates strategist at ANZ in a research note.

New Zealand government bonds 0#NZTSY= gained, sending yields 3 basis points lower at the long end of the curve.

Australian government bond futures edged higher, with the three-year bond contract YTTc1 up 1 tick at 98.190. The 10-year contract YTCc1 rose 4 ticks to 97.4350. (Editing by Kim Coghill)

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