Australia, NZ dlrs blocked by chart barriers, virus surge

  • 12/31/2021
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SYDNEY, Dec 31 (Reuters) - The Australian and New Zealand dollars were taking a breather on Friday after again faltering at major chart barriers, while an explosion of new coronavirus cases in Australia cast a pall over the economic outlook at home. The Aussie eased back to $0.7249 from a six-week top at $0.7276, but again failed to sustain a move above chart resistance around $0.7275. A clear break would open the way to $0.7368, while support lies around $0.7196 and $0.7083. That left the currency down 5.8% for the year and well off its February peak of $0.8007. The kiwi dollar stood at $0.6830 after topping out at $0.6857 overnight, just short of resistance at $0.6867. That was up from the recent 13-month low of $0.6702, but again far short of its 2021 high at $0.7463 and down 4.9% on the year. Sentiment was tested by a shock 21,151 surge in new coronavirus cases in New South Wales, double the previous day"s total and up from just 200 early in the month. The jump risked crimping consumer sentiment and spending, with plenty of media reports of mass restaurant and holiday cancellations. Analysts will be keen to see data on bank card spending out over the next couple of weeks to gauge how much damage has been done. Retail sales had been running strongly through November and into December, so some slowdown would not surprise. Any sustained weakness would challenge the Reserve Bank of Australia"s (RBA) optimism on the economy and complicate the decision on whether to end its bond buying in February or extend it to May. The central bank is due to make that call at its next policy meeting on Feb. 1. The bond market has already priced in an end to the A$4 billion-a-week programme with three-year yields up at 0.90% compared to 0.20% as recently as September. Yields on 10-year paper have steadied around 1.63% in the last few weeks, up from an all-time trough of 1.05% in August but well below the 2021 peak of 1.997%.

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