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Australia, NZ dlrs lifted by global cheer, rising bond yields | Instant News


SYDNEY, 25 Nov (Reuters) – The Australian and New Zealand dollars were rolling on Wednesday as optimism about a vaccine-driven global economic recovery boosted commodity prices and bond yields.

Strong Chinese demand for steel lifted iron ore prices to near their highest levels in more than six years, a windfall for Australia as the ore is its single largest export producer.

That helped the Aussie rise to $ 0.7365, after finally breaking resistance at the previous November peak of $ 0.7340 to be almost 5% higher for the month so far.

The next hurdle is September’s peak at $ 0.7413 and a break there will take him into territory last visited in August 2018.

The kiwi dollar extended its run to $ 0.6974 and traded briefly above $ 0.7000 for the first time since mid-2018. It’s up nearly 5.5% for the month so far.

The latest gains came on Tuesday when the New Zealand government asked the central bank to consider the issue of soaring house prices in its policy considerations.

Reserve Bank of New Zealand (RBNZ) governor Adrian Orr on Wednesday noted the bank was already accounting for housing, but investors still assumed the additional focus on hot house prices would hinder further easing.

“The proposal to change the RBNZ’s mandate to explicitly include house prices is read by market traders as a potential tightening of monetary policy,” said Kiwibank chief economist Jarrod Kerr. “Further rate cuts appear to be pushed to the edge of the table.”

The overnight index exchange now implies an easing of around 8 basis points by the end of 2021, compared to a cut of more than 25 basis points just a few weeks ago.

Long-term bond yields shot higher as the curve got steeper. The five-year newspaper yield hit the highest since August at 0.385%, far from the -0.03% touched in late September.

The ten-year yield hit the highest since July at 0.98%, after gaining 42 basis points so far this month.

Australian bonds are also feeling the pressure with the 10-year yield rising at 0.944% after gaining 10 basis points in just three sessions.

The three-year bond fell slightly to 99,825, but was supported by a purchase from the Reserve Bank of Australia (RBA) aimed at keeping yields close to 0.10%.

Edited by Stephen Coates

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Dollar held near support, NZ $ hit a two-year high | Instant News


SYDNEY (Reuters) – The US dollar weakened on Monday as the prospect of an early launch of a coronavirus vaccine offset concerns about economic restrictions to control the spread of the virus, supporting riskier assets for now.

FILE PHOTO: A US Dollar banknote seen in an illustration taken on May 26, 2020. REUTERS / Dado Ruvic / Illustration

Holidays in Japan kept most major currencies on hold, although the New Zealand dollar surged to a two-year high of $ 0.6962 as the super strong retail sales data canceled out the risk of further policy easing and left attractive yields high. [AUD/]

The euro edged up to $ 1.1872, having repeatedly failed to break above $ 1.1893 resistance last week. It will need to clear the November peak of $ 1.1919 to extend its uptrend.

Analysts at Capital Economics are optimistic on the long-term outlook for the single currency.

“We think the exchange rate will rise further over the next few years against the backdrop of lower eurozone stability risks; increasing real yield gap between the eurozone and the US; and the continued global economic recovery, “they wrote in a note.

They raised their forecast for the euro and now see it at $ 1.2500 by the end of 2021 and $ 1.3000 by the close of 2022, up from the previous $ 1.2000 and $ 1.2500.

The dollar has also drifted slowly lower on the Japanese yen and last stands at 103.74, just above the chart support at 103.62. A break there will see a retest of November trough 103.16, which was the lowest since the market turmoil in March.

Against a basket of currencies, the dollar weakened slightly at 92,266 and returned to approaching the support at 92,129 and 91,373.

Promising news about vaccines has weighed on the safe-haven dollar. The first person in the United States could receive the COVID-19 vaccine a day after the US Food and Drug Administration gave approval in mid-December.

And the UK could give regulatory approval for the Pfizer-BioNTech COVID-19 vaccine this week.

On the other hand, millions of Americans are expected to ignore warnings to stay home for the Thanksgiving holiday, while Germany may have to extend its lockdown until mid-December.

The push for coronavirus restrictions across the United States has fueled speculation that the Federal Reserve may have to ease monetary policy further, especially without a fiscal stimulus deal in sight.

Last week’s surprise move by the US Treasury to end some emergency loan programs only added to speculation.

That will increase focus on the minutes of the US central bank’s last policy meeting, due for release on Wednesday. The minutes are expected to confirm Fed policymakers discuss adding to the bank’s asset purchase plan.

“The minutes should help gauge whether our calls for an extension of the mix are due as soon as the December meeting remains on track,” wrote analysts at TD Securities in a note.

Reporting by Wayne Cole; Edited by Paul Simao & Simon Cameron-Moore

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DLR New Zealand scales 2 years and above as retail recovery breaks records | Instant News


SYDNEY, 23 Nov (Reuters) – The New Zealand dollar climbed to a two-year peak on Monday as domestic data on retail sales beat all expectations, easing the risk of further policy easing and underlining the attractiveness of currency yields.

The kiwi dollar surged 0.4% to $ 0.6961 and peaked from January and March 2019. Now temptingly approaching a high of $ 0.6969 from December 2018, its break will take it to levels not seen since June of that year.

The Australian dollar dragged higher after hitting $ 0.7320, although it didn’t hit recent peaks and major resistance at $ 0.6939.

The gains came as data showed real retail sales in New Zealand surged by a record 28% in the third quarter, recovering strongly from a historic 14.6% drop in the previous quarter when the tight coronavirus lockdown crippled consumption.

That was well above market expectations and points to an upside risk in the gross domestic product (GDP) report for the third quarter due next month.

“Today’s results are another sign in that column, highlighting the resilience of household spending appetites,” said Satish Ranchhod, senior economist at Westpac.

“It also highlights the effectiveness of monetary and fiscal stimulus in supporting demand through what has been a trial period for the economy.”

Indeed, the recent data was so strong that investors sharply reduced expectations for further easing by the Reserve Bank of New Zealand (RBNZ) and all gave up on the possibility of negative interest rates.

As a result, the yield on 10-year bonds jumped to 0.82%, from just 0.56% at the beginning of the month. In turn, the gap to the US 10-year yield has swung from -34 basis points to zero and removed one drag on the kiwi.

The spread with the Australian bond went in almost the same fashion, dropping the Aussie to NZ $ 1.0520 from a NZ $ 1.0760 high earlier in the month.

Australia’s 10-year yield is at 0.86%, retreating from its recent peak of 1.00%. The three-year bond is holding at 99,830, near the Reserve Bank of Australia’s (RBA) 0.10% target for cash yields. (Edited by Shri Navaratnam)

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Australia, NZ dlrs retreat as vaccine euphoria wanes | Instant News


SYDNEY, November 18 (Reuters) – The Australian and New Zealand dollars pulled back on Wednesday as market euphoria over vaccine news was tested by the realities of tougher economic restrictions across the United States and Europe.

Data out of Australia also showed annual wage growth hit a record low of just 1.4% in the last quarter, underlining the prospect of weak inflation and the need for monetary policy to remain loose for a long time.

The Aussie weakened to $ 0.7281, having failed to break through resistance at its November peak at $ 0.7340. Support is around $ 0.7266 and $ 0.7222.

“The market is traveling in the hope an effective vaccine will prevent a severe global economic downturn, but we are not out of the woods yet,” said Ray Attrill, head of FX strategy at NAB.

“However, China’s strong economic recovery and rising commodity prices mean a sustained upside break of the $ 0.7000 / $ 0.7400 range is more likely.”

The kiwi dollar faded to $ 0.6882 and moved away from a 19-month peak of $ 0.6919. The kiwi has been weaker recently as markets extended the likelihood of further policy easing in New Zealand and sent bond yields sharply higher.

The Reserve Bank of Australia (RBA) fell just a few weeks ago and has been busy buying bonds to limit yield gains. The yield on the 10-year newspaper slumped to 0.90% on Wednesday, from a recent 10-week high of 1.00%.

The three-year yield fell back to 0.123% and is close to the RBA’s 0.1% target, after having spiked up to 0.154% earlier in the week.

Investor demand for Australian debt remains strong with a tap of A $ 6 billion ($ 4.37 billion) of 2041 bonds that were finalized on Tuesday, attracting A $ 18.6 billion in bids.

67% of the offers came from overseas, a record high for any syndicated tap and up from 30% in previous sales. About 22% of bids came from the UK, with Asia excluding Japan taking 17% and Europe 9%.

The investment manager takes 45% of the issue and the hedge fund 19%.

$ 1 = 1.3732 Australian dollars Edited by Ana Nicolaci da Costa

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Australia, New Zealand dollar bounced back on hopes of a virus vaccine | Instant News


SYDNEY, Nov 17 (Reuters) – The Australian dollar rose to a one-week high on Tuesday, holding above the main chart resistance of 73 US cents, while its New Zealand counterpart perched on a 19-month peak as investor sentiment was boosted by hopes of a coronavirus vaccine.

Assets at risk were increased overnight by news that Moderna’s COVID-19 vaccine recorded an efficacy rate of 94.5% in the baseline number of a large late stage clinical trial.

The Australian dollar, a liquid proxy for risk, rose to $ 0.7319, a level last seen on November 9. This is approaching the last nine-week peak of $ 0.7340.

The New Zealand dollar was up at $ 0.6910. It is also within the striking distance of the $ 0.6938 peak from March 2019, its break would technically be bullish.

“Last night’s Moderna news is the second positive vaccine news after last week’s Pfizer / BioNTech results,” wrote the NAB analyst in a note.

“However, it could be said that Moderna’s initial results were even better and provided a huge boost to fighting the pandemic,” they added.

“This is all very encouraging news, which means that in late January / early February we can distribute vaccines to those who need it most.”

Earlier, the Reserve Bank of Australia (RBA) released the minutes of its November 3 policy meeting where it said it was ready to provide more policy stimulus if needed.

The RBA has cut interest rates to 0.1% and launched a A $ 100 billion quantitative easing (QE) program over six months.

Analysts said the recent virus outbreak in South Australia and the ongoing trade dispute with China could limit gains for the Aussie.

Across the Tasman Sea, the kiwi dollar is flying high after the Reserve Bank of New Zealand (RBNZ) erred last week by downplaying the possibility of negative interest rates.

That, combined with the global rally in risk assets, has seen New Zealand’s 10-year yield soar to 0.925% from just 0.58% earlier this month.

Australian yields have also risen, but not that much because of the RBA’s QE program. The 10-year term was at 0.899%, compared with 0.83% at the start of November.

New Zealand government bonds sold out, sending yields about 6 basis points higher at the end of the long curve.

Australian government futures slipped, with the three-year bond contract down half a tick at 99,825. The 10 year contract is reduced by 4 ticks to 99.07. (Edited by Sam Holmes)

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