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Australia dollar finds support, counts down to RBA speech


Reuters


By Wayne Cole

SYDNEY, April 9 (Reuters) - The Australian dollar found support on Tuesday from better domestic data and further strength in iron ore prices, while investors awaited a potentially market-moving speech from a top central banker later in the week.

The Aussie dollar was steady at $0.7127, having bounced from a $0.7088 low on Monday. It remains fenced-in by chart support around $0.7050 and layers of resistance at $0.7147, $0.7168 and $0.7207.

The kiwi has been in a swoon since late March when the Reserve Bank of New Zealand (RBNZ) surprised by saying the next move in interest rates there would likely be down.

The reversal was particularly sharp against the Aussie, which in the space of two weeks has climbed to NZ$1.0576 and away from a 31-month low of NZ$1.0272.

That could change if the Reserve Bank of Australia (RBA) were to also adopt an explicit easing bias. The deputy governor of the central bank Guy Debelle is giving a speech about the economy on Wednesday and investors will be hyper-sensitive to any hint of dovishness.

He might expand on why the central bank tweaked the last sentence of its April policy statement, making it sound more conditional.

"Some market participants consider the change in wording a hint of a possible cut to the cash rate at upcoming meetings," said CBA analyst Joseph Capurso.

"If Debelle confirms this view, market pricing for rate cuts would jump and push AUD down, potentially below $0.7000."

The run of domestic data has improved in the last couple of weeks, though house prices continue to leak lower.

Figures out on Tuesday showed some rebound in mortgage lending, with loans ex-refinancing up 2.7 percent in February for the biggest monthly gain since 2016.

Also promising for the Aussie was a bull run in prices for iron ore, Australia's biggest export earner. Chinese futures for the ore climbed 10 percent last week and hit a contract peak on Monday amid tightening global supply.

The extended rise in prices helped deliver a record trade surplus for Australia in February and another bumper result is expected in March.

Australian government bond futures were a shade softer on the day, with the three-year bond contract off half a tick at 98.605. The 10-year contract dipped 1 tick to 98.1050.

Yields on New Zealand government bonds rose 2 to 3 basis points across the curve.






This article appears in: Politics , Stocks , World Markets , Economy



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