SYDNEY/WELLINGTON, Dec 3: The Australian dollar was on the defensive today on speculation that the Reserve Bank of Australia could use its monthly policy statement to again talk down the currency.
The Aussie was pinned at $0.9090, having briefly risen to a session peak of $0.9137 after data showed surprising strength in retail sales and net exports.
But gains quickly faded due to sellers around $0.9140 and the immediate focus on the RBA.
‘Conviction was low with the RBA widely expected to ‘talk down’ the AUD in a couple of hours,’ said Annette Beacher, head of Asia Pacific research at TD Securities in Singapore.
While the RBA is seen certain to leave interest rates at a record low of 2.5 percent for a fourth month, it has been using every opportunity to encourage the currency lower. The statement is due at 0330 GMT.
Immediate support for the Aussie was seen at the November trough of $0.9055, and a break there could see it head below 90 cents.
The Aussie has lost 12 percent against the U.S. Dollar so far this year, but remains elevated by historical standards and is proving a stiff headwind for trade-exposed sectors of the economy.
Still, strength in exports and government spending suggested there was a risk that figures on gross domestic product (GDP), due on Wednesday, could also surprise on the high side and provide the currency with some support.
The New Zealand dollar was holding at $0.8182, down from a high of $0.8222 on Monday when upbeat U.S. Manufacturing data lifted the U.S. Dollar.
The currency was still outperforming its neighbour, which was languishing just above a three-year low at NZ$1.1111 .
Against a broadly weaker yen, the kiwi hit 84.44 yen , its highest since mid-May.
Data on Tuesday showed that a slight easing of prices for New Zealand’s main export commodities was compensated for by a softening in the currency, so lifting local returns.
New Zealand government bonds were a touch softer, sending yields 1.5 basis points higher.
Australian government bond futures eased with the three-year bond contract down 2 ticks at 96.840. The 10-year contract also lost 2 ticks, to 95.750.
(AGENCIES)
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