Australia, NZ dollars tread water amid higher US yields

SYDNEY: The Australian and New Zealand dollars were little changed on Tuesday against the greenback, which has risen in recent trading sessions in line with US Treasury yields.

The prospect of more fiscal stimulus under President-elect Joe Biden has weighed on US government bonds, driving Treasury yields sharply higher.

The Australian dollar was broadly steady at $0.7694 in thin volumes on Tuesday. It stood around 1.5% lower than its Jan. 6 high of $0.7895, a level not reached since March 2018.

Before the recent weakness against the greenback, the Aussie had benefited from buoyant commodity prices and a domestic economic recovery driven by the country's success in containing the coronavirus.

Softer risk appetite was also behind Tuesday's quiet session, analysts said. In the longer term, however, the Australian dollar should be well placed to reach the 80 cent level, Commonwealth Bank of Australia analysts said.

The kiwi dollar also steadied at $0.7164 to stand around 2% below the $0.7314 level hit on Jan. 6, which was the highest since April 2018.

New Zealand government bonds were lower, sending yields about 2 basis points higher at the long-end of the curve.

Australian government bond futures were slightly lower, with the three-year bond contract down 1 tick at 99.80. The 10-year contract was down 4 ticks to 98.84.