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Australian dollar at 1-mth high, kiwi snaps losing streak

Published 22/05/2018, 05:30 pm
© Reuters. Australian dollar at 1-mth high, kiwi snaps losing streak
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By Swati Pandey and Charlotte Greenfield

SYDNEY/WELLINGTON, May 22 (Reuters) - The Australian dollar rose to a one-month top on Tuesday, boosted by surging prices for oil and on conciliatory talk by the United States and China on trade, while the New Zealand currency broke a five-session losing streak.

The Aussie AUD=D4 cracked above key chart resistance to go as high as $0.7600, a level not seen since late April. It was last trading around $0.7599.

Australia is a leading exporter of petroleum products so higher oil prices will likely boost its economic fortunes.

The apparent truce between the United States and China is positive for global growth and in turn commodity prices and risk appetites, analysts said.

But "it seems this rally in the Aussie might be one to fade" as high household debt and low wage growth can weigh on domestic consumption and broader economic activity, Greg McKenna, chief market strategist at Sydney-based AxiTrader, said in a note.

The bearish case for the Aussie also rests in diverging policy stance between the U.S. Federal Reserve and Australia's central bank.

The Fed is widely expected to raise rates for a second time this year at its June meeting, while the Reserve Bank of Australia (RBA) has repeatedly emphasised the need for rates to remain at record lows for some while yet. the Tasman Sea, the New Zealand dollar NZD=D4 rose 0.3 percent to $0.6961.

The kiwi had sunk as low as $0.6851 on Monday after data showed first quarter retail sales growth had fallen to a 5-year low. softer retail data provided only a modest setback for the NZD, as the more positive tone to US-China trade relations... lent support," said ANZ economists in a research note.

Against the Aussie AUDNZD=R , the kiwi hovered near 3-1/2 month lows, largely on a subtle policy difference between the two countries after the Reserve Bank of New Zealand recently signalled rates could go in either direction. the other hand, the Reserve Bank of Australia has reiterated the next move is up, rather than down. Higher commodity prices have also boosted the Aussie while prices for dairy - New Zealand's biggest export - have not taken off this year. (Editing by Richard Borsuk)

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