Forex News

Aussie & NZ dlrs jump on yen, China hope

16 February, 2012 - Reuters
  • Risk assets rally on hopes China to support Europe
  • Yen retreats in wake of surprise BOJ easing
  • A$ clears major resistance to hit 6-mth high on yen

By Cecile Lefort and Gyles Beckford

SYDNEY/WELLINGTON, Feb 15 - The Australian and New Zealand dollars scaled multi-month peaks against the yen and rallied on the U.S. dollar on Wednesday after China reiterated its support to euro zone government debt, lifting risk sentiment.

The Antipodean currencies had already been up on the yen after the Bank of Japan surprised on Tuesday by launching another round of quantitative easing, boosting stocks there.

The Australia dollar surged to 84.35 yen , its highest since August and clearing key resistance at 83.93. It is now up 7 percent so far this year.

The kiwi jumped to 65.87 yen, its highest since September. It was last at 65.74, having gained a whopping 9 percent this year.

"The Aussie benefited from general weakness in the U.S. dollar following comments made by China about its support of Europe," said Masafumi Yamamoto, chief forex strategist at Barclays Capital.

Verbal reassurance by China's central bank governor Zhou Xiaochuan that Beijing would continue to invest in euro zone debt, gave a lift to sentiment which had earlier been subdued by simmering concerns about Greece.

"It is surprising we are still reacting the way we are given a lot of this had been stated before," said Hamish Pepper, a strategist at Barclays in Singapore.

The Chinese have often offered verbal support for the euro zone without necessarily acting on it.

"This is an indication of the environment we are in... We are playing tennis headline," he added.

Still, there were enough hope for real Chinese assistance to lift Asian share markets and risk sentiment in general.

The Aussie responded by rallying to $1.0731, from a two-week low of $1.0629 hit on Tuesday. It was still short of last week's six-month high of $1.0845, but a move above Tuesday's top of $1.0739 would suggest an end to corrective consolidation.

Australian government bond prices eased with three-year future contracts down 0.07 points to 96.420 and the 10-year 0.03 lower at 95.920.

Local data were overlooked but showed consumer confidence was surprisingly upbeat for February while sales of new cars rebounded in January.

The New Zealand dollar got a lift to $0.8380, from $0.8300 late in New York and an overnight low of $0.8273.

The kiwi was weighed on one hand by persistent concerns about Greece's debt woes and then lifted by much stronger than expected local retail data.

"For now it looks like it's topped out at around 84 U.S. cents and struggling to make any more ground, and it will pay attention to European headlines for the most part," said Westpac senior strategist Imre Speizer.

Near-term support for the kiwi is seen at the previous session's low around $0.8270, with $0.8400 still major resistance.

Speizer said if the kiwi broke convincingly through $0.8250 then it may signal the start of a significant reversal in the next few months.

Exceptionally strong fourth-quarter New Zealand retail sales, which saw a 2.2 percent rise in volumes against expectations of a 0.8 percent gain, gave the currency a modest boost.

The data reflected one-off effects -- the Rugby World Cup, changed school holidays, and retailers discounting prices to shift stock -- and was not seen as a game changer for the central bank.

"The RBNZ will place more weight on spending trends evident over early 2012 ... (and) continue to look for a tightening cycle to begin in the fourth quarter 2012, with the risk skewed towards this being pushed into 2013," said Goldman Sachs economist Philip Borkin.

New Zealand has a slew of data due Thursday ranging from snapshots of the manufacturing and jobs markets and consumer confidence, while the government issues an outline of its policy and spending priorities in the May budget.

New Zealand government bonds mostly slipped in price, sending yields as much as 3.5 basis points higher.

(Reporting by Naomi Tajitsu)

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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