Australia, NZ dollars take a breather after upside breaks
SYDNEY: The Australian and New Zealand dollars were just short of fresh highs on Tuesday as another bout of Middle East risk aversion swept markets, though both currencies found strong chart support to lean on.
Hopes for a quick ceasefire were dashed by news of another round of Israeli air strikes on Iran, spooking investors and hitting equities while boosting oil prices.
There was also speculation the United States was striking Iran itself, but these were quickly denied by the White House.
The Aussie is highly correlated to global risk plays and took a quick fall, before steadying at $0.6530.
That was off a seven-month top of $0.6552 reached overnight, while major support now lies around $0.6500 and $0.6463.
The kiwi dollar held at $0.6066, having scored an eight-month peak at $0.6088 on Monday.
It has solid support around $0.5996.
Both were aided by gains on the yen as the Bank of Japan confirmed market speculation by slowing its bond tapering plans, albeit only from March next year.
That should help relieve upward pressure on Japanese bond yields, at least at the margin, and helped lift the Aussie to 94.57 yen.
Australia, New Zealand dollars vulnerable as Israel-Iran conflict escalates
A break of 94.75 yen resistance would take it to the highest since mid-May.
In New Zealand, data showed annual growth in food prices picked up to a 17-month high of 4.4% in May, a blow to hopes for a further slowdown in overall inflation.
That led analysts at Westpac to revise up their forecast for second-quarter inflation to 0.6%, from 0.4%, which would lift that annual pace to 2.8% from 2.5%.
'Importantly, it looks increasingly likely that inflation will rise back to the top of the RBNZ's target band before year end,' noted Satish Ranchhod, a senior economist at Westpac.
The Reserve Bank of New Zealand has already signalled it is near an end to its aggressive easing campaign and a higher reading on inflation would likely add to the case against further cuts.
Markets are pricing only a 16% chance of a cut in July, but that rises to 68% for August.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Express Tribune
3 hours ago
- Express Tribune
CDWP greenlights Rs55b uplift projects
The Central Development Working Party (CDWP) — a key planning and project-approval body — has approved five development projects worth Rs55.164 billion for sustainable economic development in the country. A CDWP meeting held on Friday under the chairmanship of Federal Minister for Planning Ahsan Iqbal greenlighted these projects. Out the five, three projects totaling Rs47.439 billion were referred to the Executive Committee of the National Economic Council (ECNEC) for final approval. The agenda focused on development projects across key sectors, including environment, food and agriculture, health and physical planning and housing. A project related to the environment sector — installation of Weather Surveillance Radar at Sukkur — worth Rs5725.013 million was also approved. The chair noticed inordinate delay in implementation of the project with Japanese grant and directed the relevant authority to complete it on priority basis. A project related to food and agriculture — Balochistan Livelihoods and Entrepreneurship Project — was also recommended to ECNEC. The revised cost of the project is Rs12461.661 million. It will be financed through World Bank and International Development Association (IDA) and MDTF. The main objective of the project is to promote employment opportunities for rural communities and ensure the sustainability of enterprises in eight districts of Balochistan including Chagai, Killa Abdullah, Killa Saifullah, Mastung, Nushki, Pishin, Sherani, and Zhob. The project aims to benefit rural households by supporting livelihoods through enterprise development and job creation. Furthermore, it will extend benefits to communities for enterprises development in sectors — agriculture, livestock, forestry, mines and minerals, tourism, and industry. Ahsan Iqbal directed that the additional scope of work should include tangible and impact oriented interventions under the project.
Business Recorder
5 hours ago
- Business Recorder
Head of Russia's Rosneft says: ‘OPEC+ could speed up oil output hikes by a year'
ST PETERSBURG, (Russia): OPEC+ group of leading global oil producers could bring forward its output hikes by around a year from the initial plan, Igor Sechin, head of Russia's largest oil producer Rosneft, said on Saturday. He also said that the decision by the OPEC+ to speed up output increase now looked far-sighted and justified in the light of the confrontation between Israel and Iran. The Organization of the Petroleum Exporting Countries and its allies, led by Russia, shocked oil markets in April by agreeing a bigger-than-expected output hike for May despite weak prices and slowing demand. OPEC+ has since decided to continue with more than planned hikes. 'The announced increase in production since May of this year is three times higher than the alliance's initial plan. In addition, the entire increase in OPEC+ production could be shifted a year ahead of plan,' he said without elaborating. 'The decision taken by OPEC leaders to forcefully increase production looks very far-sighted today and, from the market's point of view, justified, taking into account the interests of consumers in light of the uncertainty regarding the scale of the Iran-Israel conflict,' he added. OPEC+ crude output represents about 41% of global oil production. The group's main objective is to regulate the supply of oil to the global market. Having spent years curbing production, eight OPEC+ countries made a modest output increase in April before tripling it for May, June and now July. Besides the 2.2 million bpd cut that the eight members started to unwind in April, OPEC+ has two other layers of cuts that are expected to remain in place until the end of 2026. Oil prices had initially fallen in response to the OPEC+ decision to increase oil production, but the outbreak of an aerial war between Israel and Iran has so far been the main factor behind their return to around $75 per barrel, levels unseen since the start of the year. Speaking at the St. Petersburg International Economic Forum, Sechin, a long-standing ally of Russian President Vladimir Putin, also said there will be no oil glut long-term despite the production rise due to low stockpile levels, though rising usage of electric vehicles in China might hit oil demand. Putin said on Friday he shared OPEC's assessment that demand for oil will remain high. He also said that oil prices had not risen significantly due to the conflict between Iran and Israel, and that there was no need for OPEC+ to intervene in oil markets. Sechin also said Rosneft had already budgeted the oil price of $45 per barrel for this year, the level the European Union eyes as the new price cap on Russian oil imports, which is now set at $60.
Business Recorder
5 hours ago
- Business Recorder
Copper bounces on Trump pause on ME as tariff uncertainty lingers
LONDON: Copper prices rebounded on Friday after US President Donald Trump pushed back a decision on US military involvement in the Israel-Iran conflict, but gains were capped by uncertainty over tariffs and Chinese demand. Three-month copper on the London Metal Exchange was up 0.4% at $9,654 a metric ton by 1400 GMT. Earlier in the session, prices hit the weakest since June 13 at $9,558.50. Most metals moved higher along with stock markets after news emerged that Trump will decide in the next two weeks whether the US will get involved in the Israel-Iran air war and as Europe tried to coax Tehran back to negotiations. 'We've got the geopolitical uncertainty in the background although maybe a little bit of a reprieve on that side in the sense that Trump wants to allow a bit more time for diplomacy,' said Nitesh Shah, commodity strategist at WisdomTree. 'But we still have all the trade fears, which may have become a secondary feature over the last week. It's not that far down the line before the expiry of the 90-day pause on the Liberation Day tariffs.' The 90-day pause in Trump's broadest 'reciprocal' tariffs will end on July 8. Premiums for nearby LME copper contracts have jumped to their highest since October 2022 because of low inventories and large holdings of cash contracts and warrants, traders said. Copper stocks in LME registered warehouses at 99,200 tons have dropped more than 60% since the middle of February and are at their lowest since August 202. Much of the outflow of LME stocks has been to the United States to take advantage of higher copper prices there in anticipation of US tariffs being imposed. US Comex copper futures dipped 0.3% to $4.84 a lb, bringing the premium of Comex over LME copper to $1,016 a ton. A Shanghai-based metals analyst at a futures firm said in addition to the Middle East and US interest rates, investors were concerned about weaker demand in top metals consumer China. Among other metals, LME aluminium gained 0.7% to $2,540 a ton, zinc rose 0.4% to $2,651.50 and tin climbed 1.5% to $32,490 while nickel shed 0.4% to $14,995 and lead dipped 0.1% to $1,989.50.
