Australian dollar tests resistance, kiwi awaits rate fate
By Wayne Cole
SYDNEY, Aug 13 (Reuters) -The Australian dollar was bumping up against resistance on Tuesday as an extended rally in Japanese stocks lifted risk sentiment, while the New Zealand dollar kept its nerve before a decision on interest rates.
The Aussie edged up $0.6592 AUD=D3, and within a whisker of the 200-day moving average at $0.6598. The next targets are $0.6625 and $0.6700, with support at $0.6550.
The kiwi dollar was a shade firmer at $0.6025 NZD=D3, after probing resistance around $0.6035. A break would open the way to $0.6097, while support lies at $0.5995.
A batch of Australian economic data showed wages rose by 0.8% in the second quarter, under forecasts of 0.9% and the lowest increase in a year.
Business activity picked up in the latest NAB survey, while price pressures slowly eased. A survey of consumers showed tax cuts were working to brighten the mood, but respondents were still wary of a hawkish Reserve Bank of Australia (RBA).
"The RBA will be somewhat relieved to see wage pressures subsiding," said Sean Langcake, head of macroeconomic forecasting for Oxford Economics Australia.
"However, absent an improvement in productivity growth, the current pace of wage growth is still a little too strong for inflation to return to target quickly."
The RBA last week warned that, on current assumptions, core inflation was receding too slowly for the bank to consider cutting rates in the next few months.
Markets now imply a 50% chance of a cut in November, and are almost fully priced for a move in December. 0#RBAWATCH
For the kiwi, much hangs on whether or not the Reserve Bank of New Zealand (RBNZ) decides to cut its 5.5% cash rate at a policy meeting on Wednesday.
Markets imply a 69% chance of a quarter-point cut, and a steep 85 basis points of easing by year-end. Such skewed positioning strongly suggests the kiwi would get a boost if the central bank holds steady. 0#RBNZWATCH
"We're not convinced the RBNZ will pull the trigger this week. They should, but it's still unlikely," said Jarrod Kerr, chief economist at Kiwibank, noting as recently as May the RBNZ was warning of rate hikes.
"Even if they hold in August and signal cuts from October, the market already has much more than that priced," he added. "A 'hold' of any description would cause a big back up in interest rates."
Reporting by Wayne Cole; Editing by Sonali Paul
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