The Australian and New Zealand dollars stood tall on Wednesday buoyed by rallies in commodities and equities, with both currencies on track for hefty quarterly gains. The New Zealand dollar stole the show at $0.6865, having climbed to a 10-week peak of $0.6881 overnight. Resistance was found at $0.69. It was on track for a 7 percent gain this quarter, thanks in part to a series of daily records in the local stock market.
Also helping was a signal from the Reserve Bank of New Zealand that it was ready to pause easing after it cut interest rates earlier this month. The next major event for the kiwi will be the GlobalDairyTrade auction in the first week of January. Milk is the country's top export earner.
The Antipodean currencies swung higher against the pound, which fell to its lowest since June . Yet, sterling is still up between 6 and 8 percent against both Aussie and kiwi for the year. A rally in the price of iron ore and oil gave legs to the Australian dollar at $0.7293. It rose 0.6 percent on Tuesday and a sustained break above heavy resistance around 73 cents could see a run to $0.7335 and $0.7386.
The Aussie has bounced around three cents this quarter, but was still down 11 percent for the year. Both the kiwi and Aussie are beneficiaries of a global yield hunt as local 2-year government bonds fetch more than 2 percent. This compares with near zero rates in Japan and even negative returns in Germany and France.
New Zealand government bonds were mixed on Wednesday, with yields down 0.5 bps at the short end and up 1.5 bps at the long end. Australian government bond futures retreated from two-month highs, with the three-year bond contract off 3 ticks at 97.980. The 10-year contract lost 5.5 ticks to 97.1900 in a bearish steepening of the yield curve. The 20-year contract kept steady at 96.6900.
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