Australian and New Zealand dlrs rally as markets look past Omicron

SYDNEY, Dec.24 (Reuters) – The Australian and New Zealand dollars held near multi-week highs on Friday as markets became more confident that Omicron would not derail global economic growth, even as it did. extended more widely.

The Aussie was up at $ 0.7235, after breaking through resistance at $ 0.7224 to hit a five-week high of $ 0.7252 overnight. That left it 1.5% higher for the week and away from the recent 13-month low of $ 0.6994.

Resistance stands at $ 0.7275 and $ 0.7368, with support at $ 0.7195.

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The Kiwi dollar rose to $ 0.6821, after hitting a three-week high of $ 0.6843. It was 1.3% firmer on the week and away from its recent 13-month low of $ 0.6702. Resistance stands at $ 0.6867.

As the spread of the Omicron coronavirus variant has triggered more restrictions around the world, two drugmakers have said their vaccines protect against it while studies have shown the variant carries a lower risk of hospitalization. Read more

In Australia, most states had reinstated mask warrants and some social distancing rules, but governments had pledged to no longer lock in given high vaccination rates. Read more

So far, the economy has held up well, with spending on bank cards still well above pre-pandemic levels and the wage bill having recouped all the losses suffered during recent lockdowns.

“With the household savings rate hitting 20% ​​in the third quarter and consumer confidence continuing, it is only a matter of time before consumption bounces back for good,” said Ben Udy, economist at Capital Economics.

“Our forecast of an 8% increase in consumption next year is well above the analyst consensus of 4.8%.”

No major economic publication is now expected before the second week of January. Key data from the Reserve Bank of Australia (RBA) will be the December employment report on January 20 and fourth quarter consumer prices on January 25.

Analysts expect the CPI report to post another high reading on core inflation, which could prompt the RBA to end its bond purchases in February and possibly soften its insistence that a rate hike is unlikely in 2022.

The market is almost fully valued for a spot rate hike from 0.1% to 0.25% by June and for rates of at least 0.75% by the end of the year.

The Reserve Bank of New Zealand (RBNZ) has already risen twice to 0.75% and is expected to drop significantly to 1.0% at its February 23 policy meeting. Four more hikes are then planned by October of next year.

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Editing by Muralikumar Anantharaman

Our Standards: Thomson Reuters Trust Principles.

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