Australian and New Zealand dollars struck by weak oil

The Australian and New Zealand dollars began the week somewhat lower on Monday, following losses in oil and copper as coronavirus infections increase globally and notwithstanding bullish sentiment in more general Asian equities markets.

The resource-sensitive Australian dollar increased to reach around flat at $0.7735 at midday, turning morning losses that forced the Aussie to $0.7706.

The New Zealand dollar slid 0.12% to $0.7142 before running a four-day low of $0.7117. The kiwi is far from its new $0.7464 high in February and has the support of around $0.705. It faces resistance at $0.7200.

Oil prices sank on Monday between mounting worries that growing numbers of COVID-19 infections in India and other countries will head to more robust measures and score economic activity, along with demand for commodities such as crude.

The sell-off in the commodities markets didn’t support the Aussie notwithstanding most other markets being more robust today, told Steven Dooley, the APAC currency strategist at Western Union Business Solutions.

There’s just a slight hangover from the somewhat weaker-than-expected data from China last week, he continued.

On Friday, the Chinese gross domestic product (GDP) increased a record 18.3% in the first quarter from a year beforehand, when COVID-19 lockdowns deadened much of the economy, but that was slower than the 19% estimate economists.

Traders, nevertheless, are bullish on both the Australian dollar and its New Zealand match in the longer term.

They’re willing to go outright long NZD, UBS strategists stated. Some of that is the forecast of a lower USD backdrop, but the bulk is how much the kiwi has reduced Q1. The launch of the Trans-Tasman travel bubble also asymmetrically helps NZD even though it’s still under tourist season.

On Monday, the authorities reestablished the Australian-New Zealand border, supporting quarantine-free travel between the countries for the first time in over a year.

Australian yields on 10-year bonds were low at 1.673%. Over the Tasman, yields on New Zealand 10-year bonds were off two basis points at 1.633%.