The Australian and New Zealand dollars paused on Tuesday after climbing for two straight sessions amid a rebound in broader risk sentiment which saw global equities rally strongly. The Australian dollar held at $0.7851, well above the more than one-month trough of $0.7759 made last week.
The New Zealand dollar was last at $0.7250, again clear of the recent one-month low of $0.7176. New Zealand government bonds rose, sending yields 2.5 basis points lower at the long end of the curve. Australian government bond futures inched higher, with the three-year bond contract up 2 ticks at 97.865. The 10-year contract added 3 ticks to 97.1250.
"In the Aussie's case the turn around in stocks is a key part of the flight higher. Risk appetite hardly ever fails to give the Aussie a lift," said Greg McKenna, chief market strategist at AxiTrader. World shares rallied on Monday in a broad advance as investors shifted asset allocations and tried to put last week's worst rout in two years past them. Meanwhile, the US dollar remains on the backfoot amid concerns over the United States' exploding budget deficits and ahead of CPI data on Wednesday.
Median forecasts are for consumer price inflation to slow a little to 1.9 percent in January, mainly due to the base effect of a high reading last year dropping out of the calculation. The core measure is seen ticking down to 1.7 percent. A result in line with or below expectations would likely be a big relief for financial markets, while anything higher could well spook investors again, lift bond yields and batter stocks.
Comments
Comments are closed for this article.