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Australia, NZ dollars near 10-week highs on softer greenback, strong iron ore

05/10/2021 02:56
Australia, NZ dollars near 10-week highs on softer greenback, strong iron ore

By Swati Pandey

- The Australian and New Zealand dollars climbed on Monday to be near 10-week highs against their U.S. counterpart as a disappointing jobs report pressured the greenback and as strong commodity prices aided risk appetite.

The Australian dollar AUD=D4 rose 0.1% to $0.7854 after surpassing critical chart resistance of $0.7815 on Friday.

It went as high as $0.7863, a level not seen since late-February, helped by solid Australian retail sales data and a strong business conditions survey. nL1N2MX01Y

The currency is facing stiff resistance at 0.7865, a breach of which would take it as high as $0.7885 while chart support lies in the $0.7815-20 region.

The Aussie jumped 1.7% last week, marking its best weekly performance since November.

"AUD/USD can remain elevated this week because commodity prices show little sign of peaking," said CBA's currency strategist Kim Mundy.

"Iron ore prices surged to fresh cyclical highs last week because a lift in Australia-China tensions sparked supply concerns," Mundy added. nL4N2MT5YU

"Nevertheless, as long as China’s demand for Australia’s iron ore remains intact, which we expect, AUD can continue to lift."

Iron ore is Australia's No.1 export earner with China its top buyer.

The main highlight in Australia this week is the Australian Budget on Tuesday due around 0930 GMT which is likely to show a greatly improved fiscal position on the back of a stronger-than-expected economic recovery and high iron ore prices. nL4N2MJ1IP

Across the Tasman Sea, the New Zealand dollar NZD=D4 held at $0.7279, near Friday's 10-week high of $0.7300.

The kiwi jumped 1.7% last week, its best weekly showing since November 2020.

The antipodean currencies got a lift from a sagging U.S. dollar after data showed the United States created only a little more than a quarter of the jobs that economists had forecast last month and the unemployment rate unexpectedly ticked higher. nL1N2MT2XD

Worryingly for the kiwi, though, New Zealand's a2 Milk ATM.NZ cut its annual sales forecast for the third time amid continued disruptions and excess inventory in its key sales channel in China. nL1N2MW0HS

Dairy is New Zealand's top export earner.

New Zealand government bonds 0#NZTSY= fell, sending yields about 2-3 basis points higher at the long-end of the curve.

Australian government bond futures eased, with the three-year bond contract YTTc1 off half a tick at 99.745. The 10-year contract YTCc1 slipped 3.5 ticks to 98.335.

(Editing by Muralikumar Anantharaman)

(([email protected]; +61 2 9321 8166; Reuters Messaging: twitter.com/swatisays))