Australian and New Zealand dollars rally pauses

21 Jun, 2012

The Australian and New Zealand dollars consolidated overnight gains on Wednesday with investors retreating to the sidelines as the outcome of an anxiously-awaited Federal Reserve policy meeting loomed. The Aussie last stood at $1.0187, within easy reach of the overnight high of $1.0202. Traders said a break above $1.0220, where stops are seen, should open up the way to $1.0250, the 200-day MA.
It outperformed its New Zealand counterpart, rising 0.3 percent to NZ$1.2804. The kiwi was around a quarter of a US cent lower on the day at $0.7954, retreating from a six-week high of $0.7991 touched overnight. Near term support was seen at $0.7940 and below that around $0.7910, with $0.7990 the first hurdle higher, ahead of a push higher to $0.8020.
The Anti-podean currencies eased on the yen, but were mixed versus the euro, which gained 0.3 percent to NZ$1.5935, but was flat at A$1.2443. "If the Fed comes to the party and gives us QE3, then that will knock the greenback and bolster the kiwi along with other risk assets," said a trader at a local investment bank. The kiwi, which has risen more than 2.5 percent over the past week, remains on an upward trajectory. Still, it felt the headwinds of a flat dairy auction, and a slightly worse-than-expected current account deficit that widened to 4.8 percent of GDP from 4.2 percent.

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