SYDNEY/WELLINGTON: The Australian and New Zealand dollars were on a firm footing on Thursday after minutes of the Federal Bank policy meeting were seen as dovish, hurting the US dollar and boosting bond prices.
The Australian dollar was at $0.7810, having briefly popped to $0.7840 when the market pushed out the timing of rate hikes in the United States.
Short-term Treasury yields boasted the biggest daily drop since mid-2011 after the minutes showed "many" Fed policy makers wanted to keep rates near zero for longer.
Yet the Aussie itself remains vulnerable, given expectations of further rate cuts in Australia.
It plumbed a six-year trough early in February and futures markets give a 50-50 chance of a rate cut to 2.00 percent in March. They are fully priced for a move by May.
Trading was light due to Lunar New Year festivities in much of Asia. Dealers cited sellers ahead of $0.7850 with buyers around $0.7750.
The New Zealand dollar climbed to a four-week high of $0.7574 following the Fed minutes.
The focus on New Zealand's relatively higher interest rate, which at 3.5 percent eclipses those of most major currencies, boosted the kiwi to a record peak against the Aussie, which fell to around NZ$1.0313.
Sellers expected above $0.7600 are seen capping the kiwi's gains against the US dollar, while technical resistance lies at $0.7569, the 23.6 percent retracement of the kiwi's sell-off since mid-July.
New Zealand government bonds rose, pushing yields 4 basis points lower at the long end of the curve.
A rally in US Treasuries sent Australian government bond futures higher, with the three-year bond contract up 5 ticks at 98.170. The 10-year contract gained 8 ticks to 97.5100.
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