🧐 ProPicks AI October update is out now! See which stocks made the listPick Stocks with AI

Australia, NZ dollars lean on support as US$ barges ahead

Published 01/04/2021, 01:13 pm
Updated 01/04/2021, 01:18 pm
© Reuters.
AUD/USD
-
NZD/USD
-
AU10YT=RR
-

By Wayne Cole

SYDNEY, April 1 (Reuters) - The Australian and New Zealand dollars were perilously close to major chart bulwarks on Thursday as the U.S. dollar continued its broad advance, though both currencies fared better against the low-yielding euro and yen.

The Aussie eased to $0.7584 AUD=D3 , after failing to clear resistance at $0.7664. The focus was on the recent low of $0.7564 where a break would risk a retreat to $0.7500, if not the 200-day moving average at $0.7385.

The kiwi faded to $0.6975 NZD=D3 and away from resistance at $0.7033. Again, that was uncomfortably near a recent four-month trough of $0.6944 and a breach would open the way to the 200-day moving average at $0.6880.

Australian data was a mixed bag with retail sales falling a smaller-than-expected 0.8% in February, while the trade surplus missed forecasts at A$7.5 billion ($5.69 billion) because of a surprisingly sharp rise in imports.

Much more emphatic were figures showing home prices rose at the fastest pace in three decades in March, delivering a windfall to consumer wealth and confidence. the surge has done little to shake the Reserve Bank of Australia's (RBA) commitment to super-loose policy, which is focused on driving unemployment down to levels that will lift wage growth and inflation.

"With this in mind, we expect the RBA to remain dovish, despite rapidly rising housing prices and growth in new housing finance," said Paul Bloxham, Australia chief economist at HSBC.

"We expect the RBA to keep its cash rate and 3-year yield targets at 0.10% in 2021 and 2022, and to extend its QE programme beyond October."

While three-year yields are pinned near 0.1%, longer-term yields have been carried higher by the global reflation trade leaving the yield curve at its steepest in decades.

Yields on 10-year bonds AU10YT=RR were up at 1.819% on Thursday, a rise of 15 basis points for the week.

With yields in Japan and the EU held back by central bank action, the Aussie has gained on the yen and euro. The euro was at A$1.5461 EURAUD= , against $1.6000 at the start of the year.

"AUD's 10-year yield pickup on the euro has trended sharply higher since November 2020," said Westpac FX strategist Sean Callow.

"Once the global recovery becomes more synchronised in the second half of the year, AUD's leverage to industrial growth should underpin gains on crosses. Our base case is A$1.51 mid-year, A$1.49 year-end."

($1 = 1.3175 Australian dollars) (Editing by Muralikumar Anantharaman)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.