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FOREX-Aussie bounces on upbeat RBA, China

Published 01/11/2016, 08:50 pm
Updated 01/11/2016, 09:00 pm
© Reuters.  FOREX-Aussie bounces on upbeat RBA, China
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* Aussie, kiwi dollars main gainers

* Australian dollar jumps 1 pct

* India, China PMI readings at heart of moves

* BOJ holds policy steady as widely expected

* U.S. election looms over Fed meeting

By Patrick Graham

LONDON, Nov 1 (Reuters) - The Australian and New Zealand dollars both gained strongly on the back of a handful of upbeat Asian economic surveys on Tuesday as investors picked through the messages from the week's first major central bank meetings.

Another relatively upbeat statement from the Australian central bank quashed any expectations of a near-term cut in interest rates and reduced the prospects of one next year, fuelling an almost 1 percent rise for the Aussie. AUD=

"There were a few economists expecting a cut ... so the fact they didn't provided a bit of relief for the currency," said Dominic Bunning, a currency strategist with HSBC in London.

"But also there was a general question mark over whether they might be a bit more dovish in the statement, because inflation obviously has been low. That they're willing to look through that low inflation, the fact that they are flexible on the inflation target, just provided a bit of a relief rally."

Solid gains for the kiwi dollar, however, pointed to a broader trend driven by rising global bond yields and another solid read on sentiment in the Chinese manufacturing sector that is crucial to world and Asian growth.

Neil Mellor, a strategist with Bank of New York Mellon (NYSE:BK) in London, argued that the rise in the Aussie was part of a broader trend to jump on the currency of any central bank that hints at a move away from the ultra-loose policy of the past decade.

"The Reserve Bank is looking at fairly weak consumer prices but asset and house prices that are going through the roof," Mellor said.

"The feeling is that now the economy is doing ok, they may be able to ease back. And anytime a central bank talks about taking their foot off the throttle they get a rise in the currency."

Elsewhere, a Bank of Japan meeting that again pushed back the horizon on getting inflation back to target was not enough to halt the yen's recent falls. It dipped another 0.3 percent to 105.12 yen per dollar, less than half a yen off 3-month lows hit last week.

Despite that the dollar edged lower going into the final days of a contentious U.S. presidential campaign. The potential of an FBI investigation into Hillary Clinton's use of a private email server to turn the campaign in favour of businessman Donald Trump has been a dollar negative so far this week, although it has also added to support for U.S. yields, in turn a dollar positive.

The euro gained 0.2 percent to 1.0998 EUR= , while the dollar index was 0.2 percent lower at 98.216 .DXY .

(Editing by Raissa Kasolowsky)

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