SYDNEY/WELINGON: The Australian and New Zealand dollars consolidated recent gains on Wednesday, as a run of upbeat domestic data kept bond yields elevated, while optimism on the global outlook weighed on the US dollar.
The Aussie was just off a two-week top at $0.7730, well up from recent troughs at $0.7564 and $0.7583. It now faces resistance around $0.7785 and $0.7819.
The kiwi dollar paused at $0.7229, having enjoyed a solid bounce from last week’s low of $0.7136. Resistance lies around $0.7255 and $0.7314. Three-year yields are pinned at 0.12% while 10-year yields stood at 1.22%, keeping the yield curve step at 110 basis points.
In New Zealand markets, a run of strong economic data and a boom in housing have seen a move to price in rate hikes from the Reserve Bank of New Zealand (RBNZ) as early as 2022. The RBNZ’s own survey of inflation expectations revealed a marked pick-up in the one-year outlook to 1.73%, while the two-year forecast climbed to 1.89% and near the middle of the central bank’s 1-3% target band.