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Australia, NZ dollars transfixed as trade talks tick down

Published 10/12/2019, 12:43 pm
Updated 10/12/2019, 12:49 pm
© Reuters.  Australia, NZ dollars transfixed as trade talks tick down
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By Wayne Cole

SYDNEY, Dec 10 (Reuters) - The Australian and New Zealand dollars shuffled sideways on Tuesday as Sino-U.S. trade talks approached a weekend tariff deadline with little sign of progress, while data pointed to subdued economic conditions at home.

The Aussie idled at $0.6825 AUD=D3 in very quiet trade, having spent six sessions snared in a snug $0.6813/6862 range.

The kiwi dollar was equally becalmed at $0.6555 NZD=D3 , though it remains within striking distance of last week's four-month top at $0.6576.

Measures of volatility AUDVOL= are near the lowest this century as investors shy from taking positions ahead of a Dec. 15 deadline for new tariffs on China.

U.S. Agriculture Secretary Sonny Perdue on Monday said President Donald Trump does not want to implement the tariffs but wanted "movement" from Beijing to avoid them. data were too mixed to offer any impetus with a survey of business showing activity remaining subdued in November while confidence ebbed a little. Australia Bank's index of business conditions held at +4 in November, still short of the long-run average of +6.

"The survey is consistent with ongoing weakness in GDP growth, especially private demand, and suggests there has been little improvement in Q4 for GDP," said NAB group chief economist Alan Oster.

Figures for the third quarter out last week showed household consumption grew at the slowest pace since the global financial crisis, limiting gross domestic product (GDP) to a modest increase of 0.4%.

The Reserve Bank of Australia (RBA) and the government had been hoping consumers would spend the cash from tax relief and recent rate cuts, but most chose to save the money or pay down debt.

Speaking earlier Tuesday, RBA Governor Philip Lowe said he had been surprised at the weakness of consumption, but was still confident that households would spend much of the extra cash over time. are not so sure and futures 0#YIB: are almost fully priced for another quarter point rate cut to 0.5% by April, with a good chance of a move to 0.25% by year end.

Australian government bond futures edged higher amid the uncertainty over trade, with the three-year bond contract YTTc1 up 1.5 ticks at 99.295. The 10-year contract YTCc1 rose 2.75 ticks to 98.8775. (Editing by Sam Holmes)

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