SYDNEY/WELLINGTON: The Australian and New Zealand dollars edged up on Tuesday to find stiff chart resistance in trading thinned by a holiday-heavy week.
The Australian dollar rose as high as $0.7204 where it met solid offers at the 72 US cents chart barrier. At $0.7195 it has gained one full cent since touching a one-month trough last week.
Yet, it is still down 12 percent for the year, largely due to a diverging interest rate outlook between the United States and Australia.
The Aussie did have a go at testing this year's high against its Canadian counterpart. It powered up to C$1.0040 and a break above C$1.0066 would bring September's high of C$1.0229 in sight. Tumbling oil prices have taken a toll on Canada's Loonie, which is down around 6 percent this year.
The New Zealand dollar was "grinding higher" at $0.6785 as U.S economic data disappoints, said ANZ Bank. Major resistance was found at 68 cents.
With more US data due later, the Kiwi could push higher still, it says. "Richmond Fed and the manufacturing sector is likely to elicit more of a reaction than the third read of Q3 GDP."
ANZ sees resistance at $0.6820 and support at $0.6730.
New Zealand government bonds gained, sending yields 3 basis points lower across the curve.
BNZ Senior Market Strategist Kymberly Martin noted bond swap spreads were widening further. From 10 basis points a few weeks ago, 10-year swap spreads were now approaching 30 basis points and "we see further widening near-term."
She said bonds were likely to be supported in the new year as there was a drought of new issuance until mid-February.
Australian government bond futures were a touch firmer, with the three-year bond contract up 1 tick at 97.940. The 10-year contract added 1.5 tick to 97.1900, while the 20-year contract was 1 tick higher at 96.6900.
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