Forex News

Aussie, kiwi struggle to extend gains, Fed chief eyed

27 March, 2012 - Reuters
  • Aussie, kiwi still under pressure after big fall last week
  • Antipodeans bounce on broadly weaker yen

By Mantik Kusjanto and Cecile Lefort

SYDNEY/WELLINGTON, March 26 (Reuters) - The Australian and New Zealand currencies struggled to make gains against the U.S. dollar on Monday, as concerns about global growth weighed on risk assets ahead of bond auctions in Europe and an EU meeting later this week.

The Australian dollar stalled at $1.0456 versus $1.0475 late in New York Friday, having clawed off a two-month low of $1.0336 set last week.

Early buying from a Swiss bank sent the Aussie to a session high of $1.0493. Still, worries about a hard economic landing in China, Australia's single biggest export market, have soured the Aussie's outlook.

Commodity currencies also face risks from several events this week, including key economic data from Germany, bond auctions in Italy and a meeting of euro zone finance ministers.

Italy is looking to raise up to 7.5 billion euros in the debt markets amid renewed pressure on peripheral euro zone debt sparked by fears of fiscal slippage.

"It's a surprise (auction) result that will have an effect on the Aussie," said a trader at a European bank in Singapore.

"The $1.0300 level is going to be very pivotal if we are to see renewed weakness due to local or offshore data, while on the topside, there is room to move back to $1.0520," he added.

The Aussie stumbled more than 1 percent last week, after a warning by global miner BHP Billiton of slowing Chinese demand for iron ore and surprisingly weak Chinese economic data added to concerns about Beijing's demand for Australian commodities.

This week sees few offerings of top-tier Australian economic data. The Reserve Bank of Australia releases its semi-annual financial stability review on Wednesday, and is expected to give the banking sector a clean bill of health.

In the short-term, Fed Chairman Ben Bernanke could very well steal the limelight with a speech at 1200 GMT as some are looking for signs of further quantitative easing.

NEW ZEALAND DOLLAR

The kiwi dollar nudged lower to $0.8162, from $0.8180 in New York on Friday. But it was still well off last week's near two-month low of $0.8058.

It has lost some of its shine after a poor showing of local data added to worries about the global growth outlook.

The latest IMM positioning data showed speculators had cut bets on kiwi strength during the week ended March 20, with net long positions - bets the currency will rise - falling by more than two-thirds. Aussie net long positions fell by a third.

Imre Speizer, a senior market strategist at Westpac, said the kiwi's net long position was now close to historical lows.

"Curiously, the kiwi has not yet fallen in response although there may yet be a lagged negative response," Speizer said.

The currency was unmoved by the trade data, which showed a small monthly surplus in February. See

The euro held most of its recent hefty gains against the Antipodeans. It was last at A$1.2675 , having touched a year high of A$1.2758 on Friday.

Against the kiwi, the single currency nudged lower to NZ$1.6236 , but remained within easy reach of a 10-week high of NZ$1.6394 set last week.

The Antipodean currencies pushed away from near two-week lows against the yen, having posted their biggest weekly loss since November. The Aussie gained 0.2 percent to 86.39 yen , while the kiwi stood at 67.47 , up from 66.50 plumbed last week.

But further gains on the yen may be limited for now amid talk of fund repatriation to Japan as the financial year-end on March 31 looms, traders said.

New Zealand government bonds were broadly flat, as were Australian debt futures. The three-year contract was steady at 96.330, while the 10-year contract added 0.005 points to 95.765. Both were well off early November lows plumbed last week.

(Australia and New Zealand bureaux)

Copyright Thomson Reuters 2012. All rights reserved.

The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.

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