SYDNEY, May 11 Reuters The Australian and New Zealand dollars held near 10week highs on Tuesday, as global commodity prices extended their bull run and Australias government prepared to hand down an expansionary budget later in the day.
The Aussie edged back to 0.7834, after touching a top of 0.7891 overnight. The next major bull target is the February peak just above 0.8000, while support comes in around 0.7825 and 0.7790.
The kiwi dollar stood at 0.7259, having also reached a 10week top at 0.7304. Its February peak is all the way up at 0.7463, while support lies at 0.7260 and 0.7245.
Both were underpinned by strength in commodities, with the Aussie energised by a remarkable 10 surge in iron ore prices to record highs. The steelmaking mineral is Australias single biggest export earner, worth A150 billion in the year to March.
The melt up in commodity prices over the last week has added significant weight to that view that the A remains undervalued, said Richard Franulovich, head of FX strategy at Westpac.
We used the dip below 0.7680 earlier last week as an opportunity to trigger our buy recommendation. Dips should now be limited into the 0.7785 and 0.7820 region.
The jump in iron ore to over 200 a tonne has been a huge tax windfall for the Australian government, which had budgeted for prices of just 55 a tonne.
That will be one reason it can announce a much smallerthan feared budged deficit later today, though it will still be easily the largest on record….