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Australia, NZ dlrs enter calm spell ahead of data deluge

Published 23/04/2020, 01:35 pm
© Reuters.
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By Wayne Cole

SYDNEY, April 23 (Reuters) - The Australian and New Zealand dollars marked time on Thursday as global markets braced for a round of factory surveys that were likely to underline just how much damage the coronavirus had done to economies everywhere.

In one of the calmest sessions for weeks, the Aussie sat still at $0.6305 AUD=D3 and well within the week's relatively tight range of $0.6254-$0.6398.

The kiwi dollar was a shade softer at $0.5940 NZD=D3 after touching a two-week low of $0.5912 overnight.

Investors are awaiting a welter of flash surveys on manufacturing and services from around the globe which are expected to show drastic declines in activity. In Japan, its services sector shrank at a record pace in April, while factory activity also contracted. own survey from CBA and IHS Markit showed a huge 17 point drop in its overall activity index to a record low of just 22.4. Any number below 50 implies a contraction.

Most of the damage was done in the services sector as lockdowns and social distancing shut cafes and restaurants and hammered tourism.

"The overall result is simply astonishing," said CBA senior economist Gareth Aird. "Company shutdowns, government restrictions and steep falls in customer demand have effectively seen private demand collapse over April."

"New orders decreased substantially and the shock to global demand was picked up by a big fall in new orders from foreign customers."

That was a disappointment as exports had recovered sharply in March. Preliminary figures from the Australian Bureau of Statistics showed exports of goods jumped 29% in original terms in March to A$36.1 billion ($22.79 billion). was a particularly steep increase in shipments of iron ore to China as Beijing re-opened its economy.

While Australia has had considerable success in containing the virus, the government has indicated it will likely still be a few weeks before restrictions can be eased.

At least the government has had no trouble in selling mountains of new debt to pay for much-needed stimulus measures.

On Thursday alone auctions of A$5 billion in new short-term notes drew bids worth a hefty A$20.6 billion.

Yields on three-year bonds AU3YT=RR were steady at 0.28% having held close to the Reserve Bank of Australia's (RBA) 0.25% target for almost a month now.

The 10-year bond future YTCc1 was off a slight 2.5 ticks on Thursday at 99.1400, implying an yield of 0.86%.

(Editing by Shri Navaratnam)

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