Australian dollar steady, NZ$ down as focus on French election

[SYDNEY] The Australian dollar trod water on Friday while its New Zealand counterpart edged lower as investors shifted focus to this weekend's first round of voting in the French presidential election.

With millions of French voters still undecided or planning to abstain, the vote is the most unpredictable in France in decades and investors are nervous about potential last-minute surprises that could trigger market turmoil.

Opinion polls suggest that the election in the second-biggest euro zone country will likely come down to a duel in the final between independent centrist Emmanuel Macron and Marine Le Pen, head of the anti-European Union and anti-immigrant National Front.

The Australian dollar held at US$0.7527 after gaining 0.4 per cent in the previous session. For the week, it is down 0.7 per cent.

Against the euro the Aussie climbed 0.5 per cent, rising above a 3-month low touched on Thursday, after a shooting on the Champs-Elysees shopping boulevard in central Paris that killed one policeman on Thursday night.

France has been hit by a series of deadly attacks since 2015 and dealers were unsure if the latest incident might aid the cause of Le Pen. Markets fear the hard-right candidate would try and take France out of the EU and the euro, which would likely see the single currency tumble in anticipation.

Locally, investors await Australia's first-quarter inflation data due on April 26. Headline consumer price inflation is expected to accelerate to 2.2 per cent, mostly on temporary factors, with underlying inflation remaining subdued at 1.8 per cent.

Tepid consumer prices is one of the key concerns of the Reserve Bank of Australia (RBA) which has left interest rates at a record low 1.50 per cent after last easing in August 2016.

Across the Tasman Sea, the New Zealand dollar hit a one-week low of US$0.6984. It was last down 0.2 per cent at US$0.70. "It's difficult to argue that the Kiwi should be stronger given that we expect growth to tail off this year, and as the US economy builds momentum and policy there normalises," said ANZ senior rates strategist David Croy. "But equally, it's difficult to be bearish given New Zealand's respectable credentials. More range-trading looks in the offing."

New Zealand government bonds eased, sending yields 1.5 basis points higher at the long end of the curve.

Australian government bond futures slipped, with the three-year bond contract down 3 ticks at 98.170. The 10-year contract edged 4 ticks lower to 97.43.

REUTERS