SYDNEY/WELLINGTON: The Australian and New Zealand dollars traded in a narrow range against their US peer on Monday, but advanced versus a battered pound on mounting worries the UK may opt to exit the European Union.
The Australian dollar was sidelined at $0.7159, but up from a low of $0.7068 on Friday. It rallied 0.7 percent last week, well above a seven-year trough of $0.6827 touched in January.
Resistance was found at $0.7187 with support at $0.7120-25, ahead of the 71 cents mark.
Underpinning the Aussie was a rise in metal prices and iron ore, Australia’s top export earner.
Also helping the Antipodeans was heavy selling in the pound on concerns that Britain could quit the European Union.
“GBP opened Monday’s session sharply lower after London Mayor Boris Johnson stated he will campaign for the UK to leave the EU,” said Joseph Capurso, a strategist for Commonwealth Bank of Australia.
Sterling dropped nearly 0.7 percent to A$1.9954, nearing an 8-month trough of A$1.9966 set last week. A break could open a retracement to A$1.9600.
Likewise, sterling fell to its lowest since June at NZ$2.1383 to be last at NZ$2.1500.
The Antipodean currencies also regained lost ground against the yen. The Aussie rose 0.4 percent to 80.84 yen, having bounced 3 yen since hitting a low earlier this month. The kiwi gained 0.5 percent to 75 yen.
The New Zealand dollar was treading water at $0.6643, as a dearth of local data led investors to wait for leads from offshore.
“NZD/USD remains caught in the 0.66’s, unable (or perhaps unwilling) to strengthen while China remains volatile, but also equally unwilling to decline,” said Mark Smith, senior economist at ANZ, in a research note.
New Zealand government bonds were a touch softer with yields 1 basis point higher.
“It is a very light week ahead on the NZ economic calendar, so offshore moves are going to be the dominant force on NZ rates,” BNZ currency strategist Jason Wong said in a research note.
Australian government bond futures eased, with the three-year bond contract off 4 ticks at 98.190. The 10-year contract shed 3 ticks to 97.5400, while the 20-year contract was also down 3 ticks at 97.0150.
The spread between 10- and 3-year government bonds stood at 65 basis points, having shrunk to 64 basis points on Friday, the smallest in 10 months.—Reuters
