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Australia, NZ dollars take stock after scoring fresh highs

Published 12/01/2018, 02:38 pm
Updated 12/01/2018, 02:40 pm
Australia, NZ dollars take stock after scoring fresh highs
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By Wayne Cole and Charlotte Greenfield

SYDNEY/WELLINGTON, Jan 12 (Reuters) - The Australian and New Zealand dollars both hit four-month highs on Friday as their U.S. counterpart came under broad based pressure, though trade figures from China proved too mixed to provide any further impetus.

The Aussie dollar AUD=D4 broke above 79 cents for the first time since September to top out at $0.7906, before profit-taking hauled it back to $0.7880.

A surprisingly strong report on Australian retail sales on Thursday had helped the Aussie clear first-line resistance at $0.7884. It went on to crack a top from October at $0.7898, a break that was bullish for a move to chart targets at $0.7949 and $0.7978.

"We think there is further scope for gains, especially as the domestic story is supportive," said analysts at ANZ. "Further, the U.S. dollar is unloved, at present, global growth is solid and commodities are generally performing well."

The Thomson Reuters CRB index of commodities .TRJCRB , which covers a broad range of sectors, reached its highest in a year overnight having risen in 17 of the last 19 sessions.

Iron ore futures TIOc1 also came within a whisker of their September top at $77.72 and are up a quarter in value in the past two months.

Australia is the world's largest exporter of iron ore and a major supplier of coal, copper, gold and liquefied natural gas.

Commodities have been underpinned by surprisingly resilient demand from China, partly as Beijing's efforts to curb pollution lead to more imports of high quality iron ore and coal for Australia.

Data on Friday showed Chinese exports stayed buoyant in December, though imports missed forecasts after a very strong November. B9N1OT01U

The next major event is figures on U.S. consumer prices and retail sales later on Friday, where a soft outcome could drag the U.S. dollar down to the benefit of the Aussie and the kiwi.

The New Zealand dollar NZD=D4 stood at $0.7261, after reaching a four-month peak of $0.7275 and held gains for the week of 1.3 percent.

It got a leg up when domestic data showed a sharp rebound in consents to build new homes and eased concerns about the housing market. NZD looks poised for some catch-up with its commodity currency peers, suggesting that tactical longs on the crosses may be increasingly attractive," said Citi analysts in a note.

"Ahead of critical inflation data released on Jan. 24, we believe risk-return favours NZD longs and would look to sell AUDNZD on rallies."

New Zealand government bonds 0#NZTSY= gained, sending yields 1.5 basis points lower towards the long end of the curve.

Australian government bond futures were mixed, with the three-year bond contract YTTc1 up 1 tick at 07.835. The 10-year contract YTCc1 eased 1 tick to 97.2550. (Editing by Jacqueline Wong)

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