The Australian and New Zealand dollars regained further ground on Monday courtesy of a broadly weaker US counterpart and expectations the European Central Bank will soon be forced to take bold stimulus measures. The Australian dollar climbed to $0.8231, building on gains made late last week when investors sold the US dollar across the board on the back of the fall in US wages even as payrolls increased by a brisk 252,000.
The Aussie has also put some distance from six-year lows of $0.8033 set last week. Immediate resistance was found at $0.8138. The New Zealand dollar rose to an one-month high of $0.7865, before trimming gains to $0.7844. Resistance lay at $0.7910, its 100-day moving average, which has held since August.
Underpinning the Antipodean currencies was euro selling after soft economic data fanned expectations of more aggressive action from the European Central Bank at its policy meeting on January 22. "It hard to see any major reversal in the euro ahead of the ECB meeting," said Sean Callow, a senior currency strategist at Westpac. "The euro could still fall considerably. It is not (yet) weak against the US dollar and Aussie."
The euro fell to A$1.4412, having shed 2.7 percent last week, the largest drop in more than a year. Support was found at A$1.4300. Against the kiwi, the euro slipped to NZ$1.5111, having dropped as far as NZ$1.5038 last week, its weakest since August 2012. It has tumbled more than 6 cents so far this year and a break of NZ$1.4955 would be a record low.
The Antipodeans were also enjoying hefty gains against sterling with the kiwi hovering near a 9-month peak. Australian government bond futures rose, with the three-year bond contract up 2 ticks at 97.910. The 10-year contract added 4 ticks to 97.3650, having touched a record peak of 97.4650 last week. The premium between three-year and 10-year cash bonds has dropped to 52 basis points, the thinnest in six months, as falling oil prices look set to pull down inflation.
Private data released at home showed a rise in Australian job ads in December, while the official employment figures are due on Thursday. Forecasts are for a slight rise after a surprisingly strong increase in November. New Zealand government bonds followed US Treasuries higher, pushing yields as much as 3 basis points lower along the curve.
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