The Australian and New Zealand dollars edged lower on Thursday as the greenback was generally well-bid against most Asian currencies, though an impression of easing trade tensions between the United States and China supported sentiment. The Australian dollar dipped 0.3 percent to $0.7692, from a high of $0.7727 touched earlier in the session.
The New Zealand dollar was down 0.2 percent at $0.7291, from a three-week peak of $0.7322 touched earlier in the day. Both currencies had gained briefly overnight as investors increasingly assumed the trade-war rhetoric between the United States and China was largely posturing. New Zealand government bonds eased, sending yields 4.5 basis points higher at the long end of the curve.
Australian government bond futures were mixed, with the three-year bond contract flat at 97.820. The 10-year contract slipped 4 ticks to 97.320. Concerns calmed somewhat after US President Donald Trump's economic adviser Larry Kudlow said the administration was in "negotiation" with China, and not engaged in a trade war.
"Many pointed to repeated emphasis by both US and Chinese officials that there is still time for negotiations," Citi analysts said in a note. "Traders also took note of the positive headlines streaming in on NAFTA." Analysts recommended buying the kiwi against the Aussie dollar as the best play should trade concerns resurface. The Aussie is already near an eight-month trough on its New Zealand counterpart.
Traders say the downtrend is largely driven by weakness in the price of Australia's top export - iron ore - while prices of New Zealand's biggest export earner - milk - has remained more or less stable in the recent weeks.
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