Australian dollar higher as markets cheer for vaccine proliferation

SYDNEY, February 15 (Reuters) – The Australian and New Zealand dollars started the week higher against the greenback on Monday, benefiting from a strong stock and commodity market ahead of both countries’ planned coronavirus vaccine rollout.

The Australian dollar rose 0.23 to $ 0.7777, well up from this month’s trough of $ 0.7564 and $ 0.7583. It faces resistance around $ 0.7785.

The kiwi dollar was also 0.33% higher at $ 0.7239 after having a solid return from last month’s lowest value of $ 0.7097. Resistance is around $ 0.7246 and $ 0.7251.

Both risky currencies have benefited from higher commodity prices and their economic performance following their success in controlling the spread of the COVID-19 pandemic. Questions about the economic recovery in the US meanwhile put pressure on the greenback, analysts said.

Australia will begin inoculating COVID-19 next week after receiving the first 142,000 doses of the Pfizer-BioNTech vaccine, while vaccinations in New Zealand are scheduled to start on 20 February.

Positive risk appetite is likely to continue to push the Australian dollar higher against its more defensive counterparts, where stock performance is a key driver, said analysts at the Australian and New Zealand Banking Group.

Shares rose to record highs in some Asian markets, while oil rose to more than a year high as successful coronavirus vaccine development creates hope for a rapid economic recovery.

Australian equities were close to 1% higher as positive domestic corporate earnings boosted investor sentiment, while a number of financial centers in Asia remained closed Monday to the lunar New Year.

Looking ahead, dealers are expecting positive labor data from January Thursday, leading to an improvement in Australia’s unemployment to 6.5% from 6.6%.

Australian 0.12% three-year bond yields remain tied near the RBA’s target of 0.10%, while Australian 10-year bond yields edged up to 1.30%, the highest since March.

New Zealand’s interest rates on 10-year paper rose up to 1.393%, but were still less than the nine-month high of 1.455% touched last week.

Reporting by Paulina Duran in Sydney; editing by Simon Cameron-Moore

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