The Australian and New Zealand dollars struggled to make any headway on Friday after attempts to hold above key levels proved fruitless, though they were on track to end the week with solid gains. The Aussie eased to $0.9173, from $0.9180 in early trade, but was still well above a three-year trough of $0.8998 plumbed last week. It looked on track to post a gain of 1.3 percent for the week, the largest in four months.
It climbed to a one-week high of $0.9292 on Wednesday before investors opted to book profits and took it back below important support at 92 cents. In New Zealand, the kiwi dollar was marking time around $0.7895/00 and set to post a gain of 1.5 percent for the week.
Also capping the Aussie were growing expectations of further monetary easing by the Reserve Bank of Australia (RBA) to stimulate a slowing economy. Swap markets now see a 62 percent chance of a cut in August, from a 48 percent chance earlier in the week, while interbank futures have a 25 basis point cash rate cut to 2.5 percent by October fully priced in. The Aussie dollar's next focus point is inflation data on July 24. Forecasts centre on a reading below the mid-point of the central bank's 2 percent to 3 percent target range.
"Markets expect a dovish outcome so if there is any surprise, it's likely to be on the upside which would be Aussie-supportive," said David Scutt, a trader at Arab Bank Australia. That could send the Aussie as high as 94 cents before it would again be sold, he added. Immediate resistance was seen around $0.9190 with support at $0.9113, the 61.8 percent retracement of the $0.8998/$0.9292 rally.
