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Australia, NZ dlrs subdued, Aussie set for first weekly loss of 2017

Published 27/01/2017, 01:31 pm
© Reuters.  Australia, NZ dlrs subdued, Aussie set for first weekly loss of 2017
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By Cecile Lefort and Charlotte Greenfield

SYDNEY/WELLINGTON, Jan 27 (Reuters) - The Australian and New Zealand dollars meandered in holiday-thinned trade on Friday, with the kiwi heading for a week of solid gains while the its Aussie cousin was poised to end four weeks of rises.

Markets in China, South Korea and Taiwan were shut for the Lunar New Year holiday.

The Australian dollar AUD=D4 was quoted at $0.7530, off the 2-1/2-month peak of $0.7609 touched on Tuesday. Support was found at $0.7500.

The currency has been unable to stay above 76 cents after disappointing domestic inflation figures released this week underlined the risk that interest rates were more likely to move down than up this year.

Also undermining the Aussie was a rise in U.S. yields which lifted the U.S. dollar. All of which put the Aussie on track to end the week 0.4 percent lower. It would be the first decline this year.

Still, the local currency has again proved resilient thanks, in part, to rising prices of iron ore, Australia's top export earner. MYSTL-RIIOI-IMP

Also encouraging was Friday's data showing a 12.4 percent surge in Australia's export prices. the Tasman sea, the New Zealand dollar NZD=D4 was also subdued at $0.7242, having touched a 2-1/2-month peak of $0.7314 on Thursday.

It received a boost after data showed inflation was back in the central bank's target range for the first time in two years, suggesting further interest rate cuts were unlikely. was poised for its fifth consecutive week of rises with a gain of 1 percent.

New Zealand government bonds 0#NZTSY= eased, sending yields 0.5 basis points higher at the long end of the curve.

Australian government bond futures had a mild soft tone, with the three-year bond contract YTTc1 steady at 97.990. The 10-year contract YTCc1 shed 3 ticks to 97.1750, while the 20-year contract YXXc1 was unchanged at 96.5200.

The premium of Australian 2-year government debt over U.S. Treasury bonds rose to 63 basis points, from 60 basis points on Wednesday, which was the smallest in over a decade.

Likewise, the spread on the 10-year bonds edged up to 28 basis points, from a trough of 21 basis points. (Editing by Simon Cameron-Moore)

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