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Australian dollar hits multi-year highs vs euro, yen, Swiss franc

Published 16/02/2017, 01:30 pm
Australian dollar hits multi-year highs vs euro, yen, Swiss franc

By Cecile Lefort

SYDNEY, Feb 16 (Reuters) - The Australian dollar powered up to multi-year peaks against the yen, Swiss franc and euro on Thursday as investors poured money into higher yielding assets.

The Australian dollar AUD=D4 also stood tall versus its U.S. counterpart at $0.7715, having broken key resistance at 77 cents.

It briefly popped to a three-month high of $0.7732 after data showed a surprise dip in Australia's unemployment rate. L4N1FZ6O1

But it was unable to sustain gains as detailed figures revealed a more complex picture.

"It's steady as you go in the job market," said Craig James, chief economist at CommSec. "Jobs are up again, unemployment down a touch and more hours are being worked. Overall, a good result, but not great," he said.

Resistance was found at $0.7778, the November peak.

Much of the recent Aussie strength came as investors borrowed at low rates in yen and Swiss francs to buy higher-yielding assets such as the Aussie, a popular strategy known as the carry trade.

The Aussie rose as far as 88.17 AUDJPY=R , the highest since December 2015. It looked poised to test 92 yen, a level last seen mid-2015, while it scaled 2-year peaks against the Swiss franc at 0.7763 AUDCHF=R .

It also swung higher against the euro, largely because of market jitters about the outcome of elections in several European countries this year.

The euro stood near two-year lows at A$1.3751 EURAUD=R and a break of A$1.3679 would be the weakest since 2013. The euro has lost more than 5 percent so far this year.

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Across the Tasman Sea, the New Zealand dollar NZD=D4 rose to $0.7227, from $0.7201 early and away from a low of $0.7156 touched on Monday.

The kiwi has been struggling since the Reserve Bank of New Zealand signalled it could keep rates at record lows for two years, hosing down bets of a rate hike later in 2017.

Still, the kiwi is up 4 percent so far this year, largely because of a strong domestic economy and the high-yielding appeal of New Zealand government bonds versus the zero rates of Japan.

A survey of consumer confidence slipped in February as New Zealanders returned to work from the holiday season. Zealand government bonds 0#NZTSY= dipped, sending yields as much as 4 basis points higher.

Australian government bond futures also fell, with the three-year bond contract YTTc1 off 3 ticks at 97.930. It dropped as far as 97.900, the lowest this year.

The 10-year contract YTCc1 slipped 2 ticks to 97.1600, while the 20-year contract YXXc1 lost 2.5 ticks to 96.5450.

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