Australia, NZ dollars extend gains on oil surge, economic optimism
- "It's also the culmination of a re-rating of commodities in general, driving the view that the global recovery and reflation brings the potential for further gains in commodity currencies."
SYDNEY: The Australian and New Zealand dollars extended their gains against the greenback on Tuesday, as optimism around a global economic recovery and a spike in oil prices underpinned the commodity-exposed currencies.
The Aussie bounced 0.29% to $0.7802, the highest in a month. The next chart barrier sits at $0.7820, its January peak.
Across the Tasman, the kiwi dollar advanced 0.46% to $0.7260, and up from Friday's trough of $0.7178. Resistance lies around $0.7280 and the January peak of $0.7314.
The Australian, New Zealand and Canadian dollars all moved in tandem with higher oil prices on Tuesday, as a cold front shut wells and refineries in Texas, the biggest crude producing state in the United States.
The currencies had also benefited from stronger iron ore and copper prices, buoyant expectations for a global recovery and vaccine optimism, traders said.
"That's been the key driver over the last 24 hours," said Steven Dooley, APAC currency strategist at Western Union Business Solutions.
"It's also the culmination of a re-rating of commodities in general, driving the view that the global recovery and reflation brings the potential for further gains in commodity currencies."
Australian 10-year bond yields were pushed wider to 1.33%, the widest since March. At 0.12%, yields on three-year paper remained pinned near the Reserve Bank of Australia's (RBA) target of 0.10%.
Yields on New Zealand's 10-year bonds were 6 points higher to 1.46%.
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