The Australian and New Zealand dollars extended their early rally in European deals on Monday, as investor sentiment rose on expectations that the People’s Bank of China is mulling loosening liquidity conditions to bolster economic growth.
The central bank would expand the deposit base of banks by changing rules governing how loan-to-deposit ratios are calculated at them starting from next year, according to reports.
In its effort to boost the lending capacity of Chinese banks, the PBoC will include savings held by lenders for non-deposit-taking financial institutions into bank deposits from 2015. This would widen the banks’ deposit base, leaving more liquidity available for lending and investment.
China is the biggest trading partner of Australia and New Zealand. Any measure designed to stimulate China’s growth could underpin trading prospectus of both Australia and New Zealand.
The aussie hit a 1-week high of 0.8162 against the greenback, while approaching 0.9485 against the loonie, its strongest since December 19. If the aussie extends rise, it may test resistance around 0.825 against the greenback and 0.955 against the loonie.
The aussie spiked up to near 3-week highs of 1.4944 against the euro and 98.20 against the yen, reversing from early lows of 1.5016 and 97.60, respectively. Continuation of the aussie’s uptrend may lead it to resistance levels of around 1.48 against the euro and 100.00 against the yen.
The kiwi hit 0.7798 against the greenback, its highest since December 17, compared to last week’s closing value of 0.7750. Extension of the kiwi’s bullish trend may take it to a resistance around the 0.80 zone.
The kiwi hit more than a 3-week high of 93.82 against the yen, while approaching 1.5636 against the euro, its strongest since September 8. The kiwi is likely to find resistance around 95.00 against the yen and 1.55 against the euro.
The kiwi edged up to 1.0455 against the Australian dollar in early European deals, but held steady since then. At last week’s close, the pair was worth 1.0448.
Published: 2014-12-29 11:07:00 UTC+00
Australian, NZ Dollars Extend Rise Against Majors
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