Australian dollar firm as US government nears reopening, data supports
SYDNEY, Nov 11 (Reuters) - The Australian dollar held firm on Tuesday, buoyed by news that the U.S. government could reopen soon from a record shutdown, while strong local survey results supported arguments against further policy easing.
The Aussie AUD=D3 slipped 0.1% to $0.6531, after a jump of 0.6% overnight to as high as $0.6540. But it is still off a recent top of $0.6617, and nowhere near reclaiming its one-year high of $0.6707.
On Monday, the U.S. Senate approved a funding bill to end a 41-day shutdown of the federal government, sending it to the House of Representatives for final approval.
Global stocks have galloped higher on hopes that the shutdown could end soon, with the safe-haven yen taking the brunt.
That saw the Aussie jump 1.2% overnight to 100.82 yen AUDJPY=R, just a touch below a one-year top of 101.2 yen.
Aiding the Aussie are also local survey results that painted a firmer picture for consumer spending and business activity in Australia.
Most strikingly, consumer sentiment surged in November, with optimists outnumbering pessimists for the first time in nearly four years.
"The practical implications of the consumer sentiment improvement include better prospects for Q4 spending and GDP," analysts at Citi Australia told clients in a note.
"The RBA needs to manage the implications of improving domestic demand with potential growth around a historically low 1.75% to 2.00% in our view. This means we stick with our view of no further rate cuts."
Three-year government bond futures YTTc1 slipped 2 basis points to 96.275, the lowest since March. Prospects for further policy easing faded a little more, with swaps now implying a chance of just about 60% for one final rate cut from the Reserve Bank of Australia in May next year. 0#AUDIRPR
The kiwi NZD=D3 was also off 0.1% at $0.5641, after rising 0.4% overnight to pull away from a seven-month low of $0.5607. Near-term resistance lies at $0.5652.
Tuesday's data showed New Zealand's inflation expectations kept subdued in the fourth quarter, paving the way for a quarter-point rate cut by the Reserve Bank of New Zealand this month to 2.25%.
Swaps imply a 10% risk that the RBNZ could surprise with a half-point cut just as it did in October.
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