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Australia dlr lifted as RBA stands pat, NZ dlr dragged higher

Published 02/05/2017, 03:40 pm
Updated 02/05/2017, 03:50 pm
Australia dlr lifted as RBA stands pat, NZ dlr dragged higher
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By Cecile Lefort and Charlotte Greenfield

SYDNEY/WELLINGTON, May 2 (Reuters) - The Australian dollar drifted higher on Tuesday after the central bank kept rates unchanged at a policy meeting and sounded a touch more optimistic about global growth, underlining the outlook for steady policy.

The Australian dollar AUD=D4 rose to $0.7550, from $0.7527 in early trade, away from a trough of $0.7452 touched on Monday.

Resistance was seen around $0.7566 and support at $0.7473.

The Reserve Bank of Australia (RBA) kept rates at a record low of 1.5 percent following two easings last year. ID:nRBA All 71 economists in a Reuters poll expected a steady outcome this week. AU/INT

"The RBA reaffirmed its neutral stance and was more constructive in terms of the global economy," said Elias Haddad, a senior strategist at Commonwealth Bank of Australia.

Yet, he added that the RBA's reference to low wage growth was likely to limit any significant upside for the Aussie.

Interbank futures 0#YIB: show almost no chance of an easing this year, while a majority of 58 economists forecast an interest rate hike by June 2018. ID:nL4N1I02HF

Helping the Aussie was broad yen weakness which sent the Aussie to a one-month high of 84.26 AUDJPY=R . It was last at 84.36, having gained more than a yen since Monday.

Likewise, the New Zealand dollar rose 0.2 percent on the yen to 77.38 NZDJPY=R , away from a trough of 76.09 touched last week.

That also supported the New Zealand dollar NZD=D4 against its U.S. counterpart.

"Of note is some recovery in the NZD. It seems a long time since we've been able to say that after a period of relentless selling pressure," said Jason Wong, currency strategist at BNZ, adding that the Kiwi had managed not to break below the key technical support level of $0.6850.

The Kiwi ground up to $0.6925 from a near-eleven-month low of $0.6852 the previous day and a solid week of daily losses.

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

Australian government bond futures eased, with the three-year bond contract YTTc1 off 3 ticks at 98.130. The 10-year contract YTCc1 dropped 3.5 ticks to 97.3600, while the 20-year contract YXXc1 lost 3.5 ticks to 96.7750. (Editing by Kim Coghill)

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