SYDNEY: The Australian dollar climbed to a one-week high on Tuesday, holding above key chart resistance of 73 US cents, while its New Zealand peer was perched at a 19-month top as investor sentiment was boosted by coronavirus vaccine hopes.
Risk assets were buoyed overnight by news that Moderna’s Covid-19 vaccine recorded a 94.5% efficacy rate in preliminary numbers from a large late-stage clinical trial.
The Australian dollar, a liquid proxy for risk, rose to $0.7319, a level last seen on Nov. 9. It was edging closer to a recent nine-week peak of $0.7340.
The New Zealand dollar was up at $0.6910. It was also within striking distance of a $0.6938 top from March 2019, a break of which would be bullish technically. Across the Tasman Sea, the kiwi dollar was flying high after the Reserve Bank of New Zealand (RBNZ) wrongfooted many last week by playing down the chance of negative rates. That, combined with a global rally in risk assets, has seen New Zealand 10-year yields spike to 0.925% from just 0.58% at the start of this month.
Australian yields have also climbed, but not by nearly as much due to the RBA’s QE programme. The 10-year was last at 0.899%, compared to 0.83% at the start of November.
New Zealand government bonds were sold off, sending yields about 6 basis points higher at the long-end of the curve.
Australian government bond futures slipped, with the three-year bond contract down half a tick at 99.825. The 10-year contract eased 4 ticks to 99.07.
“The Moderna news overnight is the second positive vaccine news following Pfizer/BioNTech results last week,” NAB analysts wrote in a note. “Arguably, however, Moderna’s preliminary results are even better and provide a massive boost to the fight against the pandemic,” they added.—Reuters
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