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Australia, NZ dlrs storm ahead as markets bet on brighter 2021

Published 31/12/2020, 01:46 pm
AUD/USD
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By Wayne Cole

SYDNEY, Dec 31 (Reuters) - The Australian and New Zealand dollars rose to fresh highs on Thursday as markets bet a vaccine-fuelled recovery in the global economy next year would boost riskier assets and commodity prices.

The Aussie dollar cleared the 77 cent barrier for the first time since April 2018 to reach $0.7707 AUD=D3 , above the $0.7559 low at the start of the week.

That rise makes the currency 10% stronger for the year and a staggering 40% firmer from the $0.5510 trough touched during the market madness of mid-March. The next chart targets put it at $0.7813 and $0.7916, both tops from early 2018.

The kiwi dollar shot to $0.7226 NZD=D3 , highest since April 2018 and a long way from a low of $0.7085 early in the week. It is up 7.4% on the year and 32% from a low of $0.5469 suffered in March.

The next major chart barriers are $0.7395 and $0.7437.

Both currencies have been buoyed by rising commodity prices with iron ore, Australia's single biggest export earner, having doubled in price this year to over $160 a tonne.

The ore brought in a record A$139 billion in the 12 months to November, helping Australia notch up its first current account surplus in more than four decades.

In contrast, the U.S. current account shortfall swelled to its widest in 12 years as imports far outstripped exports and the country borrowed more abroad to fund a ballooning budget deficit.

Australia and New Zealand have also had much more success in containing the coronavirus, though an outbreak in Sydney threatens growth into the new year.

The relative economic outperformance has seen Australian 10-year bond yields AU10YT=RR rise steadily to stand 5 basis points above Treasuries, when they started this year 55 basis points lower.

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