[SYDNEY] The Australian dollar hit a new five-month peak on Wednesday, buoyed by progress in US-China trade talks scheduled for later this week, while the New Zealand dollar found little support following a mixed picture on jobs.
The Aussie fetched US$0.6514 for the first time since early December, although it was still battling sellers at the key level of 65 cents. Overnight, it rode a soft dollar higher, eking out a small gain of 0.4 per cent even though Wall Street fell amid trade uncertainties.
Resistance is now at US$0.6550, while support is at the 200-day moving average of US$0.6459.
The kiwi popped up briefly on better-than-expected jobs data but was last flat at US$0.6011. It gained 0.7 per cent overnight, helped by a solid rise in diary prices, but resistance is heavy at US$0.6029, a six-month top from late April.
In the broader market, Wall Street futures rallied 1 per cent following news that US Treasury Secretary Scott Bessent would meet with China’s top economic official in Switzerland on Saturday, indicating a potential first step toward resolving the ongoing trade war that has disrupted the global economy
China’s central bank also announced that it would cut the amount of reserves banks must hold by 50 basis points, unleashing about 1 trillion yuan in liquidity to shore up the economy. It will also cut interest rates on the seven-day reverse repurchase agreements by 10 bps.
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With the Aussie having gained 5 per cent this year even amid the tariff uncertainties that upended share markets, the outlook for the currency, known for its risk proxy status, is getting brighter.
“It is a great sign that the Aussie is not going down when there’s bad news and it is swelling when there is good news,” said Tony Sycamore, analyst at IG. “It supports the idea that the Aussie can push up to the sort of 68 cent area.”
“Fundamentally the Aussie seems to be in a pretty good spot here.”
In New Zealand, data showed the unemployment rate held at 5.1 per cent in the first quarter, much better than a forecast 5.3 per cent. Other details still point to a weak labour market, with private sector wage growth softer than expected.
Swaps still imply the Reserve Bank of New Zealand is about 70 per cent priced to cut interest rates by a quarter-point later this month, with about three rate cuts expected by year-end. AFP
