SYDNEY (Reuters) - A hotly contested New Zealand election is set to check its currency, though analysts expect a resurgence in commodity prices to boost the fortunes of the Australian dollar which is flirting with a two-year top.
A Reuters survey of 49 analysts predicted the Australian dollar <AUD=D4> at $0.7800 in one month, unchanged from the previous poll.
The analysts then expect it at $0.7767 three-months ahead, with $0.7700 now pencilled in on a six-month horizon. That's an upgrade from the start of 2017, when the Aussie was forecast at $0.7200 in six and 12 months.
The Aussie held at $0.7990 on Thursday and recently hit a top of $0.8066. It faces stiff chart resistance around 80 U.S. cents after repeatedly failing to achieve a sustained break of that level.
The highest forecast was $0.8100 for one-month ahead from Morgan Stanley and the lowest at $0.7300 from Nomura and Banco Santander.
Australia's commodity-driven currency has found support from a recent rally in commodity prices. Copper hit a three-year high on Tuesday, aluminium was at its highest since February 2013 and iron ore was up 48 percent from June lows.
The resource-rich Australian economy gets a nice bump up in national income from higher commodity prices.
The New Zealand dollar <NZD=D4> was forecast at $0.7200 in a month, not far from current levels of $0.7214 but down from $0.7330 in the previous poll in August. It tumbled to $0.7200 recently to the lowest since June 2017.
Median forecasts further out were closely grouped, with the kiwi seen at $0.7150 in three months, $0.7100 in six months and back to $0.7200 on a 12-month horizon.
The kiwi has been sliding since July-end on nervousness ahead of a hotly-contested election on Sept.23. The centre left Labour Party has come from behind to run neck and neck with the ruling centre right National Party, leading to some uncertainty among investors.
The currency came under selling pressure after a poll showed support for Labour overtaking the ruling National party, turning the September election campaign on its head, and the make-up of the next government even more uncertain.
"This uncertainty, along with some weaker activity and inflation data appears to have been mostly reflected in a weaker NZD, especially against the AUD considering the recent surge in bulk commodity prices," said Tony Morriss, rates strategist at Bank of America Merrill Lynch.
The antipodean currencies had surged this year against a beleaguered U.S. dollar <.DXY> which is loitering around 2-1/2 year lows amid political woes, expectations of a slow pace of tightening by the Federal Reserve and heightened tensions on the Korean peninsula.
(Reporting by Swati Pandey; Editing by Shri Navaratnam)
