Aussie kiwi surge on yen skid on USD as Japan acts
Post on: 2011-11-02 By: admin
Aussiekiwi surge on yen, skid on USD as Japan acts
Commodities MarketInternationalBond Market
On Monday 31 October 2011, 15:53 EST
* Aussie leaps as high as 83.90 yen, kiwi jumps to 64.54 * Antipodeans skid on USD, still on course to post hefty
monthly gains * Markets price 80 pct chance of Australian rate cut on
Tuesday
By Mantik Kusjanto and Cecile Lefort WELLINGTON/SYDNEY, Oct 31 (Reuters) - The Australian dollar
surged to three-month highs on the yen Monday after Japan
intervened aggressively to weaken its currency, but skidded
against a broadly stronger U.S. dollar. The market also continued to count down to the Reserve Bank
of Australia's (RBA) policy meeting on Tuesday which might see
the first cut in rates in two-and-a-half years. The Aussie was up at 83.46 yen , having leapt more
than 3 percent to a peak of 83.90 when Japan entered the market
to buy U.S. dollars for yen. That set the Aussie on course for
its biggest monthly rally since 1995 with a rise of 12 percent,
a dramatic reversal from September when it slumped 9 percent. Joseph Capurso, strategist at Commonwealth Bank of Australia
(CBA), expects the Aussie to go as high as 85.50 yen before
retreating later in the week. However, with the Japanese concentrating on buying U.S.
dollars for yen, the Aussie and kiwi slipped back sharply on
their U.S. counterpart. The Aussie fell to $1.0540 , from $1.0713 on Friday
in New York, after stops below $1.0600 were triggered. The next
level of support is at around $1.0500. The local currency was still on target for a gain of around
9 percent in October, which would be the second biggest monthly
increase on record. "The Aussie has had a hell of a ride (this month)," said
CBA's Capurso. He thought the currency could rebound on Tuesday should the
RBA confound market expectations for a 25 basis-point cut in the
cash rate to 4.5 percent.Capurso expects the RBA to stay on hold, in contrast to the
majority of analysts. Likewise, the interbank market implies
around an 80 percent chance of an easing this week . The RBA has kept rates at the highest in the developed world
for almost a year, as it fretted about inflationary pressures
amid a once-in-a-century mining boom. But recent data showing consumer prices were much less of a
threat than initially feared meant the central bank had room to
take policy towards a more neutral setting.Capurso also predicted further gains for the Aussie
following the G20 meeting late this week. "The G20 will give risk assets a bit of a bump because you
should hear more details on the (EU) bailout," Capurso said.Australian debt futures gained, with the three-year contract
0.06 points higher at 96.100 and the 10-yearup
0.025 points at 95.450.NEW ZEALAND DOLLAR The New Zealand dollar skidded over a cent to
$0.8092 as stop-loss selling was triggered in the wake of
Japan's intervention. Still, the kiwi is on target for a monthly gain of 6.4
percent, which would be the largest since May 2009, thanks in
large part to relief at Europe's latest debt deal. "The response to the euro zone rescue package last week was
surprisingly strong, pushing the kiwi beyond our immediate
target," said Westpac senior strategist Imre Speizer. "But we
remain sceptical." In the near term, the kiwi was seen supported at the 55-day
moving average at $0.8087, while $0.8162 would cap the upside. Against the kiwi, the Aussie slipped to NZ$1.2994, from
NZ$1.3047. Last week the Aussie hit a 4-1/2 month high of
NZ$1.3125. New Zealand will report its third-quarter labour market data
this week, with expectations of a modest lift in wages and jobs,
while the jobless rate is forecast at 6.4 percent from 6.5
percent.There are also lots of other major events this week with the
Federal Reserve meeting Tuesday and Wednesday and the ECB on
Thursday. The G20 meets late in the week while US payrolls loom
on Friday. New Zealand government bond priceswere a touch
firmer, with yields down 4 basis points along the curve.
(Australia/New Zealand bureaux)
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