Aussie, kiwi ease

The Australian and New Zealand dollars eased on Wednesday as their US counterpart got a lift from rising Treasury yields, while the kiwi took an extra knock from a mixed set of jobs data.

The Aussie was holding at $0.6892, having slipped off a $0.6928 top overnight. The repeated failure to break resistance around $0.6930, now risks support at $0.6877.

The kiwi faded to $0.6374 and away from a three-month peak of $0.6466 hit at the start of the week. Major support lies around $0.6335.

The pullback was mainly a function of a firmer US dollar as optimism on Sino-US trade talks and a surprisingly strong survey of the US service sector pushed up Treasury yields.

As a result, Australian 10-year bond yields are now 60 basis points below those on Treasuries, compared with 75 basis points this time last month. Yet the Aussie also benefited from signs of progress in the trade talks, making gains on the euro and touching a 14-week high on the safe-haven Japanese yen. In the bond market, Australian futures eased in line with Treasuries and the three-year contract slipped 2 ticks to 99.125. The 10-year contract fell 4.5 ticks to 98.7500.