Forex News

Aussie & NZ dlrs stung by profit-taking post-Greek deal

23 February, 2012 - Reuters
  • Aussie unmoved by HSBC Flash PMI for China
  • Short-covering lifts euro to 3-week highs on Aussie
  • Antipodeans off multi-week highs on yen

WELLINGTON/SYDNEY, Feb 22 (Reuters) - The Australian and New Zealand dollars nudged lower against major currencies on Wednesday as relief at the long-awaited debt deal for Greece turned to anxiety about how it would be implemented, prompting profit-taking on recent gains.

The Australian dollar slipped for a third straight session to $1.0650, from $1.0686 in New York, though that was up from an early three-week trough of $1.0610.

It is 1.2 percent lower this week as traders booked profits on long positions. The Aussie is still up 4.3 percent this year and rose to $1.0845 earlier this month, its highest since August.

Charts showed the Aussie testing lower, with a cluster of support around $1.0578, the 38.2 percent retracement of its rally so far this year. Resistance was found at $1.0700 and $1.0750.

The market gave a surprisingly muted reaction to a solid reading of HSBC flash PMI for China, which showed a bounce to 49.7 in February from 48.8 the previous month.

The improvement was mitigated by a drop in export orders which eased to 47.4, in February from 50.4 in January.

"The export orders number was weak and that is a worry when you're biggest import customer is China," said David Scutt, a trader at Arab Bank Australia.

"So given the data was both good and bad, the incentive to push it any lower for the moment isn't great," he added.

The Australian dollar was dragged lower by a bouncy euro

which has gained 1.2 percent this week. Markets had been massively shorting the euro and the Greek bailout package provided an excuse to book profits.

The single currency touched a three-week high of A$1.2475 and was last at A$1.2427 , well off an all-time trough of A$1.2144 hit on Thursday. A sustained break above a triple top at A$1.2415 could open the way to a Fibonacci retracement target at A$1.2767.

Local data showed Australia's wage price index rose a little faster than expected last quarter, but not high enough to threaten inflation.

Australian government bond prices rose, with three-year future contract 0.02 point higher at 96.340, and 10-year contracts also up 0.025 point at 95.875.

NEW ZEALAND DOLLAR

The New Zealand dollar was little changed on the day at $0.8330, hazing backed away from a peak of $0.8429 hit on Monday, its strongest since early September.

It fell as low as $0.8306 as investors booked profits from its latest rally, but further losses were stemmed due to technical support around that level, the 21-day moving average.

Further support was seen at $0.8280, the 61.8 percent Fibonacci retracement of its August-November sell-off.

It trimmed gains versus the Australian dollar to trade at NZ$1.2777, as the Aussie clawed back broadly from earlier losses. In earlier trade it hit a four-month trough of NZ$1.2769.

The kiwi has paused from a broad rally, which had taken it to a multi-month high versus the yen and a lifetime peak versus the euro.

Against a currency basket , the kiwi slipped 0.4 percent to 73.59, retreating from 74.17 hit on Tuesday, its highest since August.

Traders expect the kiwi to remain supported around these levels, but see limited chance of a significant climb above $0.8400 for the time being, given the view that New Zealand interest rates are unlikely to rise anytime soon.

A survey conducted by the Reserve Bank of New Zealand on Tuesday supported this view, showing inflation expectations remain benign.

New Zealand government bonds were unchanged across the curve.

(Australia and New Zealand bureaux; Editing by Wayne Cole)

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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