WELLINGTON/SYDNEY: The Australian and New Zealand dollars proved resilient to a surprise ratings downgrade for Spain on Friday with investors focused on Bank of Japan's policy decision.
Investors waiting for Bank of Japan meeting outcome, which is expected to see an easing in monetary policy by increasing asset purchases by up to 10 trillion yen.
The Australian dollar at $1.0377, little changed from Thursday's late local level as investors shrugged off another European sovereign downgrade. Aussie briefly dipped 20 pips after S&P cut Spain's rating by two notches to BBB-plus.
Heavy resistance around $1.0385/90, a recent triple top, ahead of $1.0418, the April 17 high, and $1.0453. Support initially around $1.0340/43, the 20-day MA and 38.2 pct retracement of the $1.0247/$1.0399 move.
The New Zealand dollar trades at $0.8136, little changed on the day but up from a session low of $0.8123. Kiwi sticks to the narrow $0.8100-$0.8200 range seen in the past week or so.
Solid technical support seen around $0.8100, given that the 100-day MA lies at $0.8103. On a longer term basis, the 21- and 55-week moving averages lie around $0.8105, which may limit a big fall below that level.
Antipodeans retain offshore gains after positive US data lifted sentiment.
Aussie is on track to end flat for the week and month, but is still up 1.5 pct so far this year. It has been steadily easing since hitting its 2012 peak of $1.0857 in February, weighed by the prospect of interest rate cuts.
The Reserve Bank of Australia is widely expected to ease by 25bps to 4 percent next week as inflation remains benign.
Interbank futures even imply a one-in-four chance of a half-point easing. In all, there are 110 basis points of cuts implied for the next 12 months.
Antipodeans steady on the euro and yen. They remain off recent lows against the yen with Aussie at 84.07 yen from 82.82 yen on Tuesday. Kiwi at 65.88 yen from 66.20 yen, off a trough of 65.54.
Aussie dollar inches closer to one-month highs on the kiwi at NZ$1.2750.
Investors have largely shrugged off Thursday's Reserve Bank of NZ rate review. The central bank warned that if the kiwi stays high, and nothing else changes, it may shape future rate settings, taken by some as a veiled hint to cut rates.
The RBNZ's comments seen another bout of sabre rattling to try to bring down NZ dollar. Analysts doubt prospect of a rate cut, unless global outlook sours sharply. Reuters poll shows next move expected to be a rise, but not until December or first quarter next year.
New Zealand government bond prices edge up, nudging yields 2 basis points lower across the curve. NZ Debt Management Office offering an outsized NZ$900 million in three maturities at weekly bond auction.
Australian long-term debt futures bounce near all-time highs. The 10-year contract adds 0.05 points to 96.375, not far from a record high of 96.420 on Tuesday. The three-year contract up 0.06 points to 97.000, shy of the 2012 peak of 97.030.