SYDNEY, Feb 17: The Australian and New Zealand dollars edged up on Tuesday, underpinned by broad euro weakness after the collapse, yet again, of talks to secure a debt deal for Greece.
The Australian dollar was firm at $0.7784, slightly higher than early trade. It has traded in a narrow band of $0.7721 to $0.7795 since Friday.
Trading overnight was light with U.S. markets shut for a public holiday and ahead of Lunar New Year holidays in much of Asia later this week.
Minutes of the Reserve Bank of Australia (RBA) for its February policy meeting gave no clear guidance on whether it would follow up with another rate cut. The minutes showed the RBA Board discussed delaying a cut until March, implying they were not then contemplating back-to-back easings in policy.
As a result, investors trimmed the probability of a March cut to around 48 percent, from 64 percent earlier. The euro fell to A$1.4555, having dropped more than a cent from Monday’s peak to show a loss of nearly 2 percent so far this month.
Against the kiwi, the euro plumbed three-week lows around NZ$1.5086. It has tumbled 8 cents in two weeks. That helped the New Zealand dollar creep higher to $0.7505 . BNZ currency strategist Raiko Shareef said the kiwi could test $0.7600 if global prices for dairy products, New Zealand’s biggest export earner, continue to rise at an auction later in the day.
“There still is a bias to bid kiwi higher, and if there’s a strong auction the knee jerk reaction is usually to buy kiwi,” he said.
The kiwi pushed up to a post-float high against the Aussie of around NZ$1.0345.
The spread between New Zealand and Australian two-year bonds widened to 135 basis points, a whisker away from a peak of 137 basis points touched in December. New Zealand government bonds rose, nudging yields 1.5 basis points lower across the curve. Australian government bond futures were mixed, with the three-year bond contract down 1 tick at 98.130. The 10-year contract added 2 ticks to 97.5050.
The premium paid by two-year Australian government bonds over U.S. Treasuries touched a nine-year trough of 123 basis points on Monday.
(AGENCIES)
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