Aussie, Kiwi dollars near multi-week highs

Published On: February 10, 2022Categories: Trading1.5 min read

The Australian dollar was at $0.717 and the New Zealand dollar was at $0.66850

The Aussie and Kiwi dollars were trading near multi-week highs on Thursday as investors turned more bullish on risk assets such as equities while the dollar held in a narrow range ahead of U.S. inflation data due later in the day.

The Australian dollar was last at $0.717, not far from the $0.7194 reached the day before, which was near a three-week high.

Analysts at Westpac in a morning note to clients pointed to the ‘explosion higher in metals markets, lift in global risk sentiment and a softish U.S. dollar’ as factors supporting the Aussie, adding ‘a close above $0.7183 would suggest a further extension towards $0.7225 and possibly $0.7275.’

MSCI’s World Index is up nearly 2% this week after a bruising January, helped by a string of upbeat earnings, and a few positive headlines suggesting tensions between the West and Russia over Ukraine may be easing.

The New Zealand dollar , which reached a two-week high of $0.66975 on Wednesday, was at $0.66850, while the improved risk sentiment also weighed a little on the safe haven yen, which was at 115.58 per dollar, the weak end of its recent range.

But currencies in general were in something of a holding pattern waiting for the U.S. consumer price index data, which could offer investors further clues about the pace of the Federal Reserve’s monetary tightening.

A 0.5% month-over-month increase in January, and 7.3% for the year, is expected, according to economists polled by Reuters, but higher-than expected numbers could signal more aggressive interest rate increases.

Markets are widely expecting a 25 basis point interest rate increase by the Federal Reserve at its March meeting, and some are talking up the possibility of a larger 50 basis point jump.

However, Cleveland Federal Reserve President Loretta Mester said on Wednesday she did not see a compelling case to start with a 50 basis point rate increase, adding future rate increases after March would depend on the strength of inflation and how much it moderates or persists.

About the Author: Jonathan Adams

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