News: Australia dollar near three-week high as vaccinations quicken

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    The Australian dollar held near three-week highs on Thursday as a step up in vaccinations and recent encouraging economic data gave investors hope tough COVID-19 curbs would be eased in coming weeks.

    The Aussie dollar AUD=D3 stood at $0.7365, after rising 0.7% to resistance around $0.7384 overnight. Support lies around $0.7330 and $0.7285.

    Data on Wednesday showed the Australian economy had avoided a technical recession in the second quarter, spurring gains in the local currency, while a record trade surplus for July added to the better background.

    "Positive momentum should continue for the AUD as economic data improves", ANZ Research analysts wrote in a note, adding that June quarter data affirmed domestic demand was solid and would rebound sharply once lockdowns were lifted.

    That and a quicker vaccination rollout have helped markets mostly shrug off worries over a widely expected economic contraction in the September quarter.

    There was some speculation the downturn could prompt the Reserve Bank of Australia (RBA) to delay tapering its bond buying programme at a policy meeting next week, though the market was split on the chances.

    Yields on the Australian 10-year bond AU10YT=RR eased 3 basis points to 1.21%, after touching a five-week high in the previous session. That took them to 9 basis points below Treasury yields, compared to 5 basis points on Wednesday.

    Victoria and New South Wales have brought forward their inoculation targets as lockdowns spurred a surge in demand, working in line with the Australian government's plan to reopen the economy if 70%-80% of the population get at least one dose.

    Also helping the Aussie this week was the expected flows from the country's iron ore majors BHP Group (BHP) , Rio Tinto (RIO) and Fortescue Metals Group (FMG) as they pay a whopping A$32.4 billion in dividends to local investors.

    The New Zealand dollar NZD=D3 was flat around $0.7062, after firming to $0.7072 earlier as local bond yields NZ10YT=RR hit a two-month peak.

    The success of lockdowns in the country to bring down the virus tally has allowed a gradual easing of curbs, giving the Reserve Bank of New Zealand (RBNZ) more scope to tighten policy.

    Markets now imply a 96% chance the RBNZ will hike rates by 25 basis points to 0.5% at its Oct. 6 meeting, with a 90% probability of a move to 0.75% by November.

    ($1 = 1.3576 Australian dollars)

 
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