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Australia, NZ dollars pause near highs, economies re-open

Published 10/06/2020, 01:10 pm
Updated 10/06/2020, 01:12 pm
© Reuters.
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By Wayne Cole

SYDNEY, June 10 (Reuters) - The Australian and New Zealand dollars consolidated on Wednesday as their recent rallies ran out of steam, though the rapid progress being made in opening their domestic economies underpinned sentiment.

The Aussie dollar had paused at $0.6966 AUD=D3 , after an 0.8% drop on Tuesday ended an eight-session winning streak. It was still not far from an 11-month top of $0.7043 and within striking distance of resistance at $0.7082, a peak from July last year.

The kiwi dollar steadied at $0.6521 NZD=D3 , after easing 0.7% overnight from a five-month high of $0.6580. It has support around $0.6470 with resistance at $0.6629.

Both countries have proven relatively successful in containing the coronavirus with New Zealand having essentially stopped all new infections, allowing the entire economy to re-open. Even professional rugby games will return on the weekend with stadiums packed full of fans.

Surveys out from Australia on Wednesday showed consumer confidence had rebounded to pre-lockdown levels, recovering all of the historic collapse seen during April. signs continue to indicate that Australians want to get back to normal," said ANZ economist Hayden Dimes, citing a raft of timely data from foot traffic to web searches.

"People are out and about, booking restaurants and looking for places to visit. They are searching for cars to buy and thinking about home renovation."

As a result, spending on ANZ payment cards was up 4.3% in the week to June 6, compared with a year earlier, led by furniture and electronics.

CBA reported spending on its cards was 5% higher than in the same week last year, with personal care jumping as the beauty sector re-opened.

Markets were now awaiting the outcome of a U.S. Federal Reserve policy meeting later in the day with much attention on its "dot plot" forecasts for growth and interest rates. Chair Jerome Powell is likely to be questioned about the chance of negative rates or of measures to control the yield curve, as Japan and Australia have done.

The Reserve Bank of Australia (RBA) set a target for three-year yields of around 0.25% and so far has managed to keep them within five basis points of that goal, even when not buying any new paper.

The 10-year futures contract YTCc1 was 2 ticks firmer on Wednesday at 98.9825, implying a yield of 1.0175%. (Editing by Sam Holmes)

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