Currency Trading Tips: The Australian dollar held its ground on Friday, lifted by a rebound in global stocks and unfazed by a firmer U.S. dollar on the back of growing expectations that interest rates there will be on hold for longer.
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The Aussie hovered at $0.67
AUDUSD
, having eked out a small gain of 0.2% overnight to bounce back from a key support level of $0.6660. For the week, it is set for a small gain of 0.2%.
That was despite the rise in the greenback, which hit a six-week high after U.S. data – from lower jobless claims and upbeat regional manufacturing surveys – led markets to push out the expected timing for the next Federal Reserve rate cut to June or July.
The Aussie also pushed higher on the crosses. It jumped 0.6% overnight on the euro to 0.5770 (AUDEUR=R), just shy of an eight‑month peak, and gained 0.4% on the yen to 106.26
AUDJPY
, near an 18‑month high.
Across the Tasman Sea, data showed food prices in New Zealand fell 0.3% in December but electricity and gas prices were up strongly, and costs for international flights jumped 33%.
That led analysts to revise up their expectations for the fourth-quarter inflation. Both Westpac and ANZ expect CPI to rise 0.5% last quarter, higher than what the central bank had forecast. For the year, CPI likely rose 3%, hitting the top of the 1-3% band targeted by the Reserve Bank of New Zealand.
“Stronger inflation than the November MPS forecast is likely to keep the Monetary Policy Committee cautious,” said Miles Workman, a senior economist at ANZ.
“But with underlying inflation still going the right way, the bar for delivering anything other than a hold in February remains high.”
Markets imply almost no chance of a move in the 2.25% cash rate at the RBNZ’s next meeting on February 18, with the first rate hike not fully priced in by October this year. (0#NZDIRPR)
The kiwi inched up 0.1% to $0.5748
NZDUSD
, after easing 0.1% overnight. It is set for a small rise of 0.2% this week, with resistance around $0.5810.
Disclaimer
This article is intended for educational purposes only. The views and opinions expressed are those of individual analysts or brokerage firms and do not represent the views of GoldSilverReports.com. Investors are strongly advised to consult certified financial experts before making any investment or trading decisions.
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