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Aussie, New Zealand dlrs edge up on China PMI

02 February, 2012 - Reuters

WELLINGTON, Feb 1 (Reuters) - The Australian and New Zealand dollars edged up on Wednesday after China posted a higher-than-expected PMI reading, countering fears of a sharp slowdown in Beijing.

  • China's official purchasing managers' index (PMI) inched up to 50.5 in January from 50.3 in December, beating forecasts of 49.5.
  • While the reading was lower than the 52 number whispered during the U.S. session, it was high enough for risk assets to pop higher.
  • The Antipodean currencies are ultra-sensitive to news out of China, a major export market, and the solid PMI reading eased concerns of a global economic slowdown.
  • The Aussie rose to $1.0628, from $1.0616 in New York. It jumped a third of a cent to a session high of $1.0638 after the data, a level not far from a three-month peak of $1.0688 struck last week.
  • Aussie up 4.3 pct in January and charts show no sign of slowing, with support found at the 10-day MA of $1.0544 and resistance around $1.0688 ahead of $1.0697.
  • The kiwi dollar firm at $0.8253, having spiked as high as $0.8301 overnight, the best since mid-September. Traders cited demand from hedge funds and momentum buying on the break of $0.8250, but were still puzzled by the scale of the gains.
  • Having risen nearly 6 pct last month, the kiwi looks overbought technically, with a test of $0.8220, then $0.8157 possible while resistance sitting around $0.8343.
  • The kiwi shot up on the euro, which slumped 1.2 pct to a fresh record low of NZ$1.5806 overnight. Last at NZ$1.5820.
  • Antipodeans have been in demand since the Federal Reserve pledged to keep rates near zero for longer. On top of that, another round of possible quantitative easing would encourage the use of the dollar as a funding currency for carry trades. All of which would be positive for high yielding assets.
  • Sales of new homes in Australia fell 4.9 percent in December, unwinding much of the jump made the previous month despite a second cut in interest rates, according to an industry survey.
  • Australian city house prices also dropped 1 pct last quarter to be down 4.8 percent on the year .
  • The Reserve Bank of Australia (RBA) cut rates by a quarter point to 4.25 pct early in December, the second easing in as many months. Interbank futures imply a 60 pct chance of another cut at the RBA's meeting next week.
  • A resurgent yen also raises anticipation of a possible intervention from Japanese authorities. The Aussie lower at 80.87 yen from 8107 yen while the kiwi steady around 62.80 yen , but off last week's high of 63.83.
  • Aussie around NZ$1.2859 after slipping to NZ$1.2814

    • , lowest since mid October.

  • The Reserve Bank of NZ has signalled that rates are likely to stay on hold at 2.5 pct this year. But markets pricing implies a 22 pct chance of a 25 bps cut.
  • NZ government bond prices also gain, with yields down as much as 6 bps.
  • Australian bond futures higher and testing major levels The three-year contract up 0.01 points at 96.870, having touched a high of 96.900. A break would bring it to a two-month peak. The 10-year contract 0.045 points higher at 96.270, a level it has tested twice in the past month.

    (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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