The Australian dollar edged higher on Monday after data showed surging commodity prices led to record-breaking company profits in the fourth quarter, a boon for the country's trade balance and national income. The Australian dollar rose about 0.3 percent to $0.7688. The Aussie has been trading in a sideways direction since the beginning of February, facing stiff resistance at 77 US cents.
It has breached that level six times over the last two weeks but has failed to stay above it. The last time it failed at that barrier in November, it came tumbling down to $0.7163. "The reality is the Aussie needs more good news at the moment," said Greg McKenna, chief market strategist, AxiTrader. "It's just the latest reminder to the bulls that above 77 US cents is where the danger lies."
Elsewhere, the Aussie rose 0.3 percent on its New Zealand cousin and 0.2 percent on the yen. The euro grinded lower to stay near its lowest in more than three years. The New Zealand dollar was subdued on Friday, falling for a second straight session. The Kiwi hovered around $0.7200, the middle of its recent $0.7130/7246 range.
New Zealand government bonds gained, sending yields 1 basis points lower at the long end of the curve. Australian government bond futures rose, with the three-year bond contract up 1 tick at 98.020. The 10-year contract added 3.5 ticks to 97.2750. Monday's data from the Australian Bureau of Statistics showed company profits increased by a larger-than-expected 20 percent in the fourth quarter, driven by the mining sector.
That is a positive outcome for Australia's A$1.6 trillion annual economic output, data for which is due March 1. "Analysts expect a big snapback in GDP growth driven by export volumes," said Joseph Capurso, currency strategist at Commonwealth Bank.
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