Australian dollar holds onto gains, kiwi counts down to RBNZ -April 09, 2024 at 01:12 am EDT

SYDNEY, April 9 (Reuters) – The Australian dollar held
overnight gains on Tuesday, helped by higher iron ore prices and
carry demand against the yen, while the kiwi hit a two-week high
ahead of the Reserve Bank of New Zealand’s policy meeting this
week.

The Aussie was steady at $0.6608, after gaining
0.4% overnight to close above the 66 cent level for the first
time in four weeks. Prices for iron ore, the biggest Australian
export, jumped 5%, extending Monday’s gains of over 3% and
helping sustain a bullish bias for the currency.

It faces resistance at last week’s high of $0.6619 and
March’s high of $0.6667.

The New Zealand dollar climbed as far as $0.6049,
the highest in two weeks, as traders positioned themselves ahead
of Wednesday’s central bank meeting, at which its key interest
rate is expected to remain unchanged, a Reuters poll showed.

It rose 0.3% overnight, while resistance is at the 200-day
moving average of $0.6067.

The Aussie was also buoyed by carry trades as investors
borrowed the Japanese yen at zero rates to buy higher yielding
currencies. It hit a fresh nine-year peak of 100.42 yen on
Tuesday, having climbed 0.5% overnight.

The dollar, however, ran into some resistance against
the kiwi, and was down 0.2% to NZ$1.0928, after surging 4% in
just a little over a month as markets moved to price in a more
aggressive rate cutting cycle in New Zealand.

Recent economic weakness in New Zealand, including a survey
on Tuesday showing that business confidence dipped further in
the first quarter, has bolstered bets that rate cuts would start
in August.

Nomura on Tuesday closed their long position in the
Australian dollar against the kiwi.

“If the RBNZ is uncomfortable with current market pricing,
the governor could easily deliver messaging which pushes back
against that pricing. We think this could particularly be the
case,” said Andrew Ticehurst, an economist at Nomura.

In Australia, consumer mood darkened again in April amid
heightened economic worries, although business conditions held
steady in the face of decade-high interest rates, mixed results
that offered little direction for the currency.
(Reporting by Stella Qiu; editing by Miral Fahmy)