Australian, NZ dlrs nurse losses vs yen, resilient on USD

Mon, 17 Mar - 12:06pm

* Aussie down 3 yen in 6 sessions on risk aversion

* NZD off 6-year peak vs yen

* Focus on China's move to widen trading band

By Gyles Beckford and Cecile Lefort

SYDNEY/WELLINGTON, March 17 (Reuters) - The Australian and New Zealand currencies held steady against the U.S. dollar on Monday against a tense Crimean backdrop, but were nursing heavy losses against the yen as risk-wary investors sought out traditional safe havens.

The Aussie was stuck at 91.47 yen AUDJPY=R , having shed more than three yen in six sessions, with chart support found around 90.53.

The New Zealand dollar fell to 86.44 yen NZDJPY=R , from a six-year peak of 88.32 set last week. The yen was a clear winner as a referendum in Crimea overwhelmingly backed a break with Ukraine, prompting talk of sanctions against Russia.

Against the U.S. dollar, the Aussie AUD=D4 showed remarkable resilience after an attempt on the downside fizzled out.

The Aussie was last at $0.9029, having briefly dipped below 90 cents in early trade. It touched a peak of $0.9104 last week following a strong domestic jobs report.

"Here again, it seems to be the case the Aussie dollar is defying its critics," said Ray Attrill, a currency strategist at National Australia Bank. He said a lack of follow-through below 90 cents by corporate accounts or institutions squeezed Aussie bears.

Currency speculators remain negative on the Aussie dollar with data from the Commodity Futures Trading Commission showing more than 40,000 net short contracts last week.

Attrill expects the Aussie to continue to trade between 89 and 91 cents, with downside risk due to the Crimean tensions.

Resistance was seen at $0.9050, with traders citing a few stops above.

Another big focus in Asia is on the Chinese yuan after Beijing doubled on Monday the daily trading range for the yuan, adding teeth to a promise it would allow market forces to play a greater role in the economy and its markets.

The New Zealand dollar NZD=D4 held close to $0.8540 as Crimea tensions and concerns about China's economy remained dominant factors.

The kiwi touched a low of $0.8515, from $0.8527 in early trade, but bounced back to roughly where it was at the end of last week.

China's doubling of the yuan trading band was also seen weighing as investors digested the news.

"The RMB reaction to increase freedom of movement is important with weakness in the RMB a source of pressure on the New Zealand dollar," ANZ analysts said in a market note.

"However, this (yuan) depreciation may well be short-lived given one-way capital inflows and a sizeable China current account surplus."

Near-term support for the kiwi was seen around $0.8510 with the first hurdle at Friday's high of $0.8564.

The currency was unmoved by a survey showing consumer confidence hitting a nine year in the first quarter, nor another survey showing a sharp dip in service sector activity.

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The local calendar is dominated this week by fourth quarter gross domestic product data on Thursday. A Reuters poll forecasts 0.9 percent rise compared to the previous quarter, with the annual growth rate accelerating to 3 percent. Href="NewsSearch">NZ/POLL

Dairy giant Fonterra's regular milk auction is also being held. The outcome can sometimes push the kiwi, given the commodity's importance to the New Zealand economy.

New Zealand government bonds 0#NZTSY= were little-changed with a hint of an offered tone, leading to a slight rise in yields.

Australian government bond futures were steady, having recovered from multi-month lows hit last week. The three-year bond contract YTTc1 was unchanged at 97.070, while the 10-year contract YTCc1 was 0.5 ticks firmer at 96.010.

The yield premium offered by 10-year Australian over Treasuries pulled back to 140 basis points from 154 basis points, a level not seen since December.

(Editing by Eric Meijer)

((Cecile.Lefort@thomsonreuters.com)(+61 2 9373-1234)(Reuters Messaging: cecile.lefort.thomsonreuters@reuters.net))

Keywords: MARKETS AUSTRALIA/FOREX

URN: 
urn:newsml:reuters.com:20140317:nL3N0ME0D0:4
Topics: 
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