EM: Aussie dollar holds atop $1, near new high on euro
WELLINGTON/SYDNEY: The Australian dollar hovered near record highs on the euro on Wednesday and held comfortably above one US dollar as surging commodity prices gave it, and its New Zealand neighbour, a lift.
Optimism about global growth next year against a background of supply limitations for many resources, helped copper climb to new highs while oil cleared $91 a barrel and the CRB index of commodities reached levels last seen in late 2008.
Spot iron ore cleared $170 for the first time since May, auguring well for the booming mining sector. The metal vies with coal as Australia's biggest export.
The gains came despite the rise in Chinese interest rates over the weekend, suggesting investors were hopeful the tightening would help control inflation and sustain strong economic growth over the long term.
"For months now the knee-jerk reaction was that every tightening would somehow bring the economy crashing down," noted a dealer at a thinly staffed Australian bank.
"Well it hasn't happened and our economists are confident it won't next year either," he argued. "The Chinese are really being quite gradual in tightening, with an eye to sustainable growth. There's no need to make such a drama out of it."
All of which kept the Aussie dollar well supported at $1.0102 , giving it a gain for the year of 14 percent. It touched a seven-week high of $1.0153 on Tuesday, having closed before Christmas on $1.0053.
Support is seen at $1.0040 and $0.9987, with resistance at the 28-year high of $1.0182 set in November.
The local dollar also hit a record peak on the euro around A$1.2959, for a rise of no less than 23 percent this year, while the single currency slid to a six-month trough on the Kiwi .
The New Zealand dollar was firm at $0.7580, having pushed to a three-week high of $0.7609 overnight, with a dip on profit-taking attracting fund buyers.
The kiwi ranged between $0.7540 and $0.7600 in holiday-thinned trading. Support was put around $0.7490 and $0.7455 the daily low of Dec. 27, with resistance at $0.7585 and $0.7640.
It also managed to recoup a little ground on the Australian dollar at NZ$1.3305 after sliding to a 10-year low last week.
"It's a struggle with most players away on holiday, but the kiwi got support from gains against the Aussie," a dealer at a local trading bank said.
NZ interest rate futures were weaker following sharp losses in U.S. Treasuries on Tuesday, though NZ government bonds were little moved.
Australian debt futures eased but outperformed Treasuries so that the spread between 10-year yields narrowed to 220 basis points, having been as wide as 275 basis points last month.
The Australian three-year bond contract dipped 0.020 points to 94.580, while the 10-year contract eased 0.015 points to 94.280.
WELLINGTON/SYDNEY: The Australian dollar hovered near record highs on the euro on Wednesday and held comfortably above one US dollar as surging commodity prices gave it, and its New Zealand neighbour, a lift.
Optimism about global growth next year against a background of supply limitations for many resources, helped copper climb to new highs while oil cleared $91 a barrel and the CRB index of commodities reached levels last seen in late 2008.
Spot iron ore cleared $170 for the first time since May, auguring well for the booming mining sector. The metal vies with coal as Australia's biggest export.
The gains came despite the rise in Chinese interest rates over the weekend, suggesting investors were hopeful the tightening would help control inflation and sustain strong economic growth over the long term.
"For months now the knee-jerk reaction was that every tightening would somehow bring the economy crashing down," noted a dealer at a thinly staffed Australian bank.
"Well it hasn't happened and our economists are confident it won't next year either," he argued. "The Chinese are really being quite gradual in tightening, with an eye to sustainable growth. There's no need to make such a drama out of it."
All of which kept the Aussie dollar well supported at $1.0102 , giving it a gain for the year of 14 percent. It touched a seven-week high of $1.0153 on Tuesday, having closed before Christmas on $1.0053.
Support is seen at $1.0040 and $0.9987, with resistance at the 28-year high of $1.0182 set in November.
The local dollar also hit a record peak on the euro around A$1.2959, for a rise of no less than 23 percent this year, while the single currency slid to a six-month trough on the Kiwi .
The New Zealand dollar was firm at $0.7580, having pushed to a three-week high of $0.7609 overnight, with a dip on profit-taking attracting fund buyers.
The kiwi ranged between $0.7540 and $0.7600 in holiday-thinned trading. Support was put around $0.7490 and $0.7455 the daily low of Dec. 27, with resistance at $0.7585 and $0.7640.
It also managed to recoup a little ground on the Australian dollar at NZ$1.3305 after sliding to a 10-year low last week.
"It's a struggle with most players away on holiday, but the kiwi got support from gains against the Aussie," a dealer at a local trading bank said.
NZ interest rate futures were weaker following sharp losses in U.S. Treasuries on Tuesday, though NZ government bonds were little moved.
Australian debt futures eased but outperformed Treasuries so that the spread between 10-year yields narrowed to 220 basis points, having been as wide as 275 basis points last month.
The Australian three-year bond contract dipped 0.020 points to 94.580, while the 10-year contract eased 0.015 points to 94.280.
