WELLINGTON/SYDNEY: The Australian and New Zealand made solid gains across the board on Tuesday as benign US and European inflation data pushed down bond yields and added to pressure for more easing by major central banks.
The Aussie up around $1.0343 from Monday's late local level of $1.0325, touching a near two-week high of $1.0359 offshore. The currency has gained around 0.6 percent this month.
Aussie support seen at $1.0310 with resistance at $1.0360 and the $1.0395/00 area around the 200-day moving average.
The New Zealand at $0.8556 from Monday's late local $0.8529. It hit a two-week high of $0.8575 overnight. Kiwi on track to gain more than 2 percent for the month.
Kiwi support seen at $0.8525 and then $0.8515, with resistance at $0.8580 the April 15 high ahead of $0.8600.
The euro gains on the dollar and yen after Italy finally formed a government, ending two months of political uncertainty, but further gains seen capped by expectations of a rate cut at this week's European Central Bank meeting.
Money market traders are evenly split on whether the ECB will cut rates at its meeting on Thursday, according to a Reuters poll.
Confidence in euro zone economy fell more than expected in April, while inflation in Germany and Spain was well below expectations..
US data shows benign inflation pressures, with the core PCE deflator increasing only 1.1 pct for the year to March. That is the Fed's favoured inflation gauge and its decline could even stoke speculation of an increase in bond buying is possible.
Fed policy meeting ends Wednesday and, while no change is expected this time, there is a risk the central bank could signal a willingness to do more if needed.
Markets reacted by nudging Treasury yields yet lower with two-year yields dropping to 0.2112 pct, the lowest since August last year.
Improved sentiment sees stocks gain, with the US S&P 500 index closing at an all time high. Gold, oil, and metals gain, sending the Thomson Reuters-Jefferies CRB index up 1.4 pct.
Japanese markets resume after long weekend, with March unemployment, industrial production and retail sales data due.
Antipodeans push higher against the yen. Aussie at 101.17 yen from 100.73 yen, while kiwi at 83.70 yen from 83.13 yen.
Elsewhere, the pound gives back some of its recent hefty gains that propelled to a two-month high. Last trading at A$1.4972 from A$1.5039.
Australia has March private sector credit data. New Zealand has building consents, business confidence and household debt readings.
Australian debt futures retreat after hitting multi-month highs. The three-year contract indicated down 0.02 points to 97.420, while the 10-year contract eases 0.015 points to 96.885.
New Zealand government bonds with softer tone, sending yields 2 basis points higher across the curve.
<Center><b><i>Copyright Reuters, 2013</b></i><br></center>
Comments
Comments are closed.