SYDNEY: The Australian dollar was consolidating broad gains on Wednesday as strength on global commodity prices and rising bond yields gave it a leg up on the yen and euro, where most yields are still sub-zero.
The yen has been further undermined by Japan's reliance on energy imports, while Australia is the world's largest exporter of liquefied natural gas and a major shipper of coal.
That helped lift the Aussie 1.7% for the week so far to 83.40 yen, after hitting a three-month top of 83.79 overnight. A break of resistance at 82.12 early in the week triggered technical buying with the next target being 84.20.
There was a similar turn in the euro after a loss of support at A$1.5887 last week saw it dive as deep as A$1.5638. That was the lowest since early July and could herald a further retreat to the A$1.5500 area.
Australian dollar buoyed by higher commodities, easier Covid curbs
The gains in turn helped the Aussie firm to $1.7340 , having touched a one-month top of $0.7384 overnight.
The New Zealand dollar lagged behind at $0.6935, after repeatedly failing to clear resistance around $0.6970.
The Aussie has been on the rise against the kiwi for a couple of weeks now to reach a three-month high of NZ$1.0612 , well away from its September trough of NZ$1.0270.
Westpac analyst Imre Speizer saw further gains to NZ$1.0700 in part as Australia's mix of commodities was outperforming that of New Zealand, where the major earner is dairy.
Speizer noted markets were already fully priced for a string of rate rises in New Zealand, but were just starting to price in the risk of hikes from the Reserve Bank of Australia (RBA).
Interbank futures have fallen sharply in the last few days with the market now implying cash rates of 0.38% by December next year, compared to as low as 0.20% a month ago.
Bond yields have also moved sharply higher, even as the RBA insisted no hike was likely until 2024.
Australian 10-year yields have climbed almost 40 basis points in three weeks to stand at 1.69%, while the spread to US Treasuries has shifted to +12 basis points from -17 basis points.
Investors are also looking for a rebound in economic activity after a tough third quarter as rapid progress on vaccinations has allowed Sydney to ease lockdown restrictions this week, with Melbourne and Canberra likely to follow shortly.
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