Australian and New Zealand dlrs find distance a comfort amid Europe’s troubles


SYDNEY, March 1 (Reuters) – The Australian and New Zealand dollars proved resilient on Tuesday as high commodity prices and strength in national economies provided a buffer against geopolitical tensions.

The Aussie settled at $0.7254, after bouncing 0.4% overnight and away from support at $0.7152. It is facing resistance at the recent high of $0.7284 and the January high of $0.7314.

The Kiwi Dollar held steady at $0.6754, after gaining 0.5% overnight. With support at $0.6656 proving strong, the focus shifted to its recent high at $0.6808.

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Both gained more ground on the euro, which slid 0.8% overnight to hit a four-month low of A$1.5426.

Some of the demand was simply due to geography, with Australia and New Zealand being far from the troubles in Europe and with little exposure to Russian trade.

Australia, as a net exporter of energy, should also benefit from higher commodity prices, with a sharp rise in liquefied natural gas and coal, while wheat, nickel, aluminum and iron ore were all firm.

“The very aggressive moves in thermal power markets continue,” said Richard Franulovich, head of FX strategy at Westpac. “So there can be no debate here, the commodity story remains very supportive of the Australian dollar.”

“The key resistance band at $0.7180/0.7240 has given way and the A$ remains in a flag formation that points towards the 200-dma at $0.7333.”

Data out of Australia showed trade was much less of a drag on growth than previously thought in the first quarter and led analysts to revise upwards forecasts for gross domestic product, the data for which is expected Wednesday. Read more

Median forecasts called for an already rapid 3.0% rise, but NAB analysts were now looking for 3.5%, CBA tipped 3.7% and Westpac 3.9%.

The rapid recovery was noted by the Reserve Bank of Australia (RBA), which kept interest rates at 0.1% after a monthly policy meeting. Read more

RBA Governor Philip Lowe also cited the war in Ukraine as a new source of global uncertainty and said the bank would be patient before raising interest rates.

Events overseas have already seen markets push back a first hike to July from June and scrap a rate hike this year to imply four increases to 1.0% by Christmas.

Three-year bond yields also fell 16 basis points over the past two days to 1.398%.

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Editing by Shri Navaratnam

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