Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

Australia, NZ dollars near 2-1/2 week highs on risk-on rally

Published 01/06/2019, 09:29 PM
Updated 01/06/2019, 09:30 PM
© Reuters. Illustration photo of an Australia Dollar note

By Swati Pandey

SYDNEY (Reuters) - The Australian and New Zealand dollars held near 2-1/2 week highs on Monday as risk assets came back in vogue amid expectations policymakers around the world will take measures to support slowing economic growth.

Three developments on Friday gave the antipodean currencies a leg-up. First, Beijing announced a new round of trade talks with Washington. Then, China aggressively eased monetary policy, slashing bank reserve requirements to prop up the country's economy.

And investors got more to cheer about when U.S. Federal Reserve chair Jerome Powell said he would be patient and flexible on interest rate hikes.

These proved a much-needed tonic for global shares and sent the risk-sensitive Australian dollar to $0.7127, the highest since mid-December. The currency was last at $0.7120.

The Aussie and kiwi went into a tailspin last week as whispers of a possible recession in the United States grew louder, making some investors start pricing in a cut in the Fed funds rate in 2019.

Uncertainties stemming from a Sino-U.S. trade war also were stone in the shoe for markets after disappointing manufacturing data readings in both countries.

The worries sent the Aussie to near-decade lows of $0.6715 Thursday morning in a wild ride that included a computer-driven flash crash.

The currency shed all of those losses the following day and finished last week about 1 percent higher, although analysts remain cautious.

"The Aussie's short-term momentum might be to the topside but the risks that drove the local currency to ten-year lows remain," Steven Dooley, currency strategist at Western Union Business Solutions, said in a note on Monday.

"In particular, any further slowdown in U.S. or Chinese manufacturing could pressure the AUD."

The New Zealand dollar held at $0.6738, not far from Friday's 2-1/2 week top of $0.6751.

The kiwi ended last week 0.5 percent higher, led by a late risk rally on Friday.

New Zealand government bonds <0#NZTSY=> were barely changed.

© Reuters. Illustration photo of an Australia Dollar note

Australian government bond futures eased, with the three-year bond contract off 4 ticks at 98.215. The 10-year contract slipped 5.5 ticks to 97.7100.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.