Australia, NZ dollars enjoy relief rally on Xi comment

Australia, NZ dollars enjoy relief rally on Xi comment

© Reuters.  Australia, NZ dollars enjoy relief rally on Xi comment© Reuters. Australia, NZ dollars enjoy relief rally on Xi comment

By Wayne Cole and Charlotte Greenfield

SYDNEY/WELLINGTON, April 10 (Reuters) – The Australian and New Zealand dollars popped higher on Tuesday as investors wagered conciliatory-sounding comments from Chinese President Xi Jinping could lessen the risk of a trade war with the United States.

The dollar AUD=D4 rose around a third of a cent on a firm U.S. dollar to reach $0.7738, its highest in two weeks.

The major gains came on the crosses, where it climbed 0.8 percent on the safe-haven yen to a three-week top of 82.94 AUDJPY= . The euro also lost 0.5 percent to A$1.5925 EURAUD= .

The kiwi dollar rose around 0.7 percent to $0.7330, its highest in almost a month.

The gains came after Xi used a keynote speech to repeat a long-standing pledge to open China’s markets and allow more foreign investment in the Asian giant. He also defended free trade and promised to reduce import tariffs. said investors were just relieved Xi did not ramp up the rhetorical war with U.S. President Donald Trump over trade.

“President Xi has ignited a rally in risk assets that might have some legs if the U.S. can keep a lid on the protectionist rhetoric for a while,” said Sean Callow, a senior forex analyst at Westpac.

He noted there must have been considerable nerves about the speech in markets given the outside reaction to what were largely boiler-plate pledges to abide by the global rules-based order.

“There is always scope for scepticism over words versus actions but it seems that at least for now, the weight of money is against the cynics,” added Callow.

Australia and New Zealand have a lot to lose from global trade tensions given they are commodity-producing, export-heavy countries highly leveraged to world growth.

China is also Australia’s largest single export market and the Aussie is often used as a liquid proxy by investors expressing views on the country’s outlook.

Domestic data was overshadowed but showed Australian business conditions eased back from record highs in March. similar survey in New Zealand showed confidence stayed in the negative in the first quarter, though demand for firms’ services was robust. government bond futures were little changed, with all the action in currencies. The three-year bond contract YTTc1 dipped 1 tick to 97.825, while the 10-year contract YTCc1 fell 1.5 ticks to 97.3000.

New Zealand government bonds 0#NZTSY= eased a touch, lifting yields a basis point across the curve. (Editing by Subhranshu Sahu)

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