"Our view remains between the two: since migrants add to both demand and supply, the net effect is broadly neutral." (Reporting by Wayne Cole; Editing by Jamie Freed)
Messaging: wayne.cole.thomsonreuters.com@reuters.net)) By Wayne Cole
SYDNEY, April 14 (Reuters) - The Australian and New
Zealand dollars were hugging hefty gains on Friday in the wake
of upbeat domestic economic data as their U.S. counterpart came
under broad pressure.
The Aussie was up at $0.6785 , having jumped 1.3%
overnight to a seven-week top of $0.6796. The latter is a major
resistance level and a clean break would open the way to at
least $0.6855.
The kiwi dollar reached $0.6310 , after climbing
1.3% overnight and away from the week's low of $0.6184.
The gains came after a soft reading on U.S. producer prices
added to speculation the Federal Reserve might almost be done
hiking rates and boosted risk sentiment globally.
That contrasted with a surprisingly strong report on
Australian employment for March, showing the labour market
holding up well in the face of higher rates.
Markets imply around a 40% probability the Reserve Bank of
Australia (RBA) will hike rates again in the next few months
and, importantly, almost no chance of a cut this year. Fed fund futures are wagering on around 50 basis
points (bp) of easing by the end of the year.
"The jobs data should keep the RBA vigilant on the wages and
inflation front, especially service sector inflation which is
proving sticky globally, and remains consistent with its
tightening bias," said RBC Capital Markets chief economist
Su-Lin Ong.
"We retain a final 25bp hike in our RBA profile in May to
capture these risks, although it may come later than this."
Markets are also leaning toward a quarter-point hike to 5.5%
from the Reserve Bank of New Zealand (RBNZ) when it meets in
May. That is seen as the top of this cycle, with some chance of
an easing at the end of the year. Migration has been supporting demand in the economy. Data
released on Friday showed arrivals were the highest ever in
February, and net migration the second highest.
The RBNZ has cited migration as a source of net demand and
inflation pressures potentially requiring higher interest rates,
Westpac economist Michael Gordon said.
"The business community seems to be taking the opposite view
at the moment, hoping that the return of migrant workers will
ease labour shortages and bring wage inflation down," he added.
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