Australia’s dollar snapped an eight-day advance as a technical gauge signaled the currency was poised for a reversal.
The 14-day relative-strength index for the Aussie climbed to 77 on Oct. 18, a level unseen since May 2011. Australia’s bonds rose for a third day after speculation that the Federal Reserve will put off tapering stimulus sent U.S. yields to almost a three-month low. Demand for New Zealand’s kiwi dollar was bolstered after data showed net immigration climbed to a decade high in the smaller nation.
“The Aussie will struggle from here towards parity” with the dollar, said Hideki Shibata, a senior interest-rate and currencies strategist at Tokai Tokyo Research Center Co. “Relative-strength indexes are often used as a trigger for profit taking by those who are long a certain currency.”
The Aussie was little changed at 96.73 U.S. cents at 4:59 p.m. in Sydney after rising 2.7 percent in the eight sessions through Oct. 18. It earlier touched 96.79, the strongest since June 4. New Zealand’s dollar lost 0.1 percent to 84.93 U.S. cents.
The RSI gauge for the kiwi versus the U.S. dollar advanced to 73 last week.
The Fed will delay the first reduction in its bond purchases until March after the partial government shutdown slowed fourth-quarter growth and interrupted the flow of data, economists said. Policy makers will pare the monthly pace of asset buying to $70 billion from $85 billion at their March 18-19 meeting, according to the median of 40 responses in a Bloomberg News survey of economists conducted Oct. 17-18.
Ten-year U.S. Treasury yields dropped to as low as 2.54 percent in New York on Oct. 18, the least since July 24. Yields on similar-maturity Australian government debt fell four basis points, or 0.04 percentage point, to 4.08 percent today.
In New Zealand, permanent arrivals exceeded departures by 2,740 in September, the most since July 2003, the statistics bureau said in its International Travel and Migration report. The seasonally adjusted net loss of 800 migrants to Australia last month was the smallest since September 2003.
“We did have some quite strong New Zealand migration figures, which actually tell the story of New Zealanders turning for New Zealand from Australia after a long period of the flip side, which, I guess, does reinforce the story of fundamentals favoring the kiwi,” said Mike Jones, a currency strategist in Wellington at Bank of New Zealand Ltd.
New Zealand’s dollar was little changed at NZ$1.1387 per Aussie. It touched NZ$1.12 on Aug. 1, the strongest since October 2008.