US Markets

Australia, NZ dollars jump on China stimulus hopes, mood cautious

Credit: REUTERS/DAVID GRAY

The Australian dollar climbed to a six-week high on Wednesday while its New Zealand cousin inched up on expectations that top trading partner China will introduce more policy measures to stave off a sharper slowdown.

By Swati Pandey

SYDNEY, Sept 11 (Reuters) - The Australian dollar climbed to a six-week high on Wednesday while its New Zealand cousin inched up on expectations that top trading partner China will introduce more policy measures to stave off a sharper slowdown.

The Australian dollar AUD=D4, a liquidy proxy for Chinese assets, rose 0.3% to a high of $0.6885, a level not seen since July 31.

The Aussie has risen every single day this month but two and is so far up 2% in September on broader expectations global central banks, including the U.S. Federal Reserve, will take steps to save the world from tipping into recession.

The New Zealand dollar NZD=D4 went as far as $0.6439 to be within striking distance of a recent 3-1/2-week top of $0.6444.

The kiwi is so far up 1.9% in September after two straight monthly losses.

Wednesday's gains came after the editor-in-chief of China's Global Times said on Twitter the country would introduce "important measures" to ease the negative impact from its long and bitter trade war with the United States.

The Global Times is a tabloid published by the People's Daily of China's ruling Communist Party.

"Any steps taken to boost China's growth are prima facie positive for A$," Westpac currency strategist Sean Callow said.

"But we suspect AUD/USD will need more substantive news in order to close the day above its 100-day moving average of $0.6907."

The Aussie has consistently traded below $0.6900 since end-July, largely on expectations of further monetary policy easing in the country as domestic data disappoints.

Adding to that grim view, a survey on Wednesday showed Australian consumers had turned gloomier in September worried about their personal finances and the near-term economic outlook.

The dim reading comes a day after a separate survey found momentum in the corporate sector was weakening with measures for business conditions and confidence both falling to below average levels.

Financial futures are pricing in two cuts to interest rates to 0.5% by the Reserve Bank of Australia (RBA) by mid-2020 from a record low of 1% currently. 0#YIB:

In New Zealand, Fonterra Co-operative FCG.NZ, FSF.NZ said on Wednesday it expected to report its worst annual loss as it shocked markets with sizable write-downs of some of its overseas assets.

New Zealand media outlet Stuff reported Fonterra will be cutting jobs as part of its restructure though the company said it was too early to speculate on the subject.

The report weighed on the kiwi dollar for a large part of the day before news about the expected China stimulus propped it higher.

New Zealand government bonds 0#NZTSY= fell in line with Treasuries, sending yields about 5 basis points higher on the long-end of the curve.

Australian government bond futures were weaker as well, with the three-year bond contract YTTc1 down 2.5 ticks at 99.135. The 10-year contract YTCc1 slipped 5 ticks to 98.87.

(Editing by Jacqueline Wong)

((swati.pandey@thomsonreuters.com; +61 2 9321 8166; Reuters Messaging: swati.pandey.thomsonreuters.com@reuters.net; twitter.com/swatisays))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Latest US Markets Videos

    #TradeTalks: How Investors Start to Position Themselves in front of the Election

    WealthWise Financial CEO Loreen Gilbert joins Jill Malandrino on Nasdaq #TradeTalks to discuss what she is watching in the markets as investors start to position themselves in front of the election.

    Sep 10, 2020

    Reuters

    Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

    Learn More