Stepping up verbal intervention may be the Reserve Bank of Australia’s only option to curb the Aussie as strengthening economic data and a neutral policy stance drive the currency toward a three-month high.
The Australian dollar was set for a second week of declines as prospects of continued reduction in U.S. monetary stimulus and weaker-than-expected local business investment data damped demand for the currency.
Australia’s dollar is set for a second weekly decline after Federal Reserve Chair Janet Yellen said the central bank is likely to keep trimming bond purchases that have buoyed higher-yielding assets globally. * AUD down 0.2% to 89.46 cents as of 2:15pm in Sydney; currency has lost 0.4% since Feb. 21 and is set for a 2.2% monthly gain; pivot 89.47; resistance 89.90, 90.14, 90.82; support at 89.22, 88.79, 88.12 * “We’re shifting back into an environment in which you’d want to sell into Aussie rallies,” says Todd Elmer, currency strategist at Citigroup Inc. “In the weeks ahead, the medium- term downtrend in the Aussie is likely to reassert itself.” * Jan. private sector credit m/m +0.4% vs est. +0.5% * Australia’s 10y yield touched 4.03%, lowest since Feb. 5; 3y yield fell to as low as 2.83%, a level unseen since Feb. 4 * AUD/USD 1-mo. implied volatility up 5.5 bps to 9.42% * Australia’s 1-yr qtrl
Here’s what to look out for when finance ministers and central bankers from the Group of 20 nations meet in Sydney this weekend. Federal Reserve Chair Janet Yellen, European Central Bank President Mario Draghi and U.S. Treasury Secretary Jacob J. Lew are among those set to attend.
Investors should buy the New Zealand dollar after foreign-exchange markets misinterpreted a speech by central-bank Governor Graeme Wheeler as signaling intervention to weaken the currency, according to Citigroup Inc. and Nomura Holdings Inc.
The New Zealand dollar may gain against its Australian counterpart on speculation Reserve Bank of New Zealand Governor Graeme Wheeler may signal a bias toward higher interest rates in a statement tomorrow, according to Citigroup Inc. and UBS AG.