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Australia, NZ dollars set for another week of gains on commodity price boom

Published 30/04/2021, 01:03 pm
© Reuters.
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By Swati Pandey

SYDNEY, April 30 (Reuters) - The Australian and New Zealand dollars were poised for another week of gains on Friday, led by strength in commodity prices with iron ore rallying more than 30% in the past month and copper at decade highs.

Prices of soft commodities and foods have also risen in recent days, particularly benefiting the kiwi dollar.

The Australian dollar AUD=D4 was last at $0.7774 with the next chart resistance seen at $0.7820. Critical chart support lies at $0.7699.

The Aussie is so far up 0.4% for the week, on track for its fourth straight weekly gain. It jumped 2.4% in April alone.

The New Zealand dollar NZD=D4 was at $0.7247, not too far from a two-month high of $0.7286 reached on Thursday.

The kiwi is up 0.7% so far this week, set for its fifth straight weekly rise. It has climbed 3.8% so far in April.

Analysts said a combination of strong commodity prices and soft U.S. dollar have boosted the antipodean currencies. Iron ore is Australia's top exports while New Zealand is the world's leading supplier of dairy.

Investor attention will turn to the Reserve Bank of Australia's (RBA) May policy meeting on Tuesday where it is widely expected to keep rates at a record low of 0.1%.

Next Friday, the RBA will deliver its quarterly economic outlook, "which will formalise the strength in labour market conditions through forecast upgrades to the unemployment rate," ANZ economists said in a note.

The Australian federal budget will be delivered the week after, on May 11, and is expected to show a rapid improvement in the country's fiscal position.

The only policy event on the New Zealand calendar slated next week is the country's central bank Financial Stability Report.

"Given this backdrop, our bias is for some modest upward drift in AUD/NZD towards the top of the 2021 trading range," the ANZ economists added.

The Aussie was last at $1.0729 against the kiwi AUDNZD= , tripping from a six-month high of $1.0946 reached just last month.

"The intersection of the 100- and 200-day moving averages at 1.0750 looks to be a pretty decent entry level," they said.

New Zealand government bonds 0#NZTSY= were sold off, sending yields about 3-4 basis points higher across the long-end of the curve.

Australian government bond futures slipped too, with the three-year bond contract YTTc1 off 1 tick at 99.73. The 10-year contract YTCc1 fell 3.5 ticks to 98.295.

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