Australia, New Zealand dollars drift higher after bumper April, resistance still heavy

The Australian and New Zealand dollars drifted higher on Thursday after a bumper April that saw them both notch fresh multi-month peaks amid all the tariff chaos, although resistance is still heavy in the near-term.

Trade data from Australia showed its surplus on goods widened sharply in March, with another strong month of gold exports to the United States ironically turning Australia's normal trade deficit with the U.S. into a three-month surplus of A$4 billion.

The Aussie AUDUSD was 0.3% firmer at $0.6420, having edged up 0.3% overnight to a high of $0.6417, within a whisker of its 2025 high of $0.6450. Buyers have emerged around $0.6344, which is the near-term support level.

For April, it gained 2.5% as investors sold the U.S. dollar as Washington's confusing trade policies fuelled fears of a global economic recession.

The kiwi NZDUSD also climbed 0.2% to $0.5944, having ended April with a hefty gain of 4.6%. It is, however, now some distance away from its six-month peak of $0.6029 hit just over a week ago.

"We do think the U.S. dollar can weaken from here ... and it does suggest you would see further appreciation of the Australian dollar," said Kerry Craig, a global market strategist at JPMorgan.

The Aussie is also finding some support from expectations that the Reserve Bank of Australia would be cautious about aggressively easing monetary policy even though a quarter-point rate cut in May is deemed as a done deal. (0#AUDIRPR)

The beat in headline inflation figures had markets more or less pricing out the chance of an outsized half-point at the next meeting in May. Still for all of 2025, they expect a total easing of 120 basis points.

As Australians are set to vote in a general election on Saturday, the most recent polling suggested the ruling centre-left Labor Party led by Prime Minister Anthony Albanese is likely to retain power.

Research from Dimensional Fund Advisors showed that historically there are no consistent patterns in stock market returns in the months when federal elections have taken place. Most analysts reckon the outcome will have little bearing on markets.

"Lastly on Australia's AAA credit rating, the risks around a downgrade have been overplayed, and it's unlikely to materialize soon," said Prashant Newnaha, senior Asia-Pacific rates strategist at TD Securities.

"Deficits closer to 2-2.5% of GDP are more likely down the track, but in no way threaten the AAA rating."