The Australian dollar stayed near a 2-1/2-month peak on Monday while the US dollar was on the back foot after US President Donald Trump offered no detail on his plans to stimulate economic growth. The Australian dollar stood at $0.7572, within kissing distance of last week's high of $0.7589, a level not seen since November 11.
The Aussie slipped 0.3 percent on its New Zealand cousin but stayed near a two-month high. The New Zealand dollar rose 0.5 percent to $0.7200, not too far from a more than one-month high of $0.7225 touched last week. The kiwi is up 3.7 percent in January, on track for its best monthly performance since last June. New Zealand government bonds were little changed.
Australian government bond futures rose, with the three-year bond contract up 2 ticks at 97.96. The 10-year contract climbed 3 ticks to 97.215. The Aussie posted its fourth straight weekly gain last week and is up more than 5 percent so far in January, making it one of the best-performing major currencies this year.
That is a marked turnaround from late December when it hit a seven-month trough of $0.7160 as the US dollar rode high on wagers that Trump's policies would stoke US inflation.That reflation trade seems to have faltered because Trump has since winning the November 8 election held back any details of his economic policies.
Investors had been looking to Trump to highlight his plans for fiscal spending, tax cuts and regulatory reforms in Friday's inaugural speech. He focused instead on "America first" campaign catchphrases. "In our view, the USD's upside is limited to the peak reached in late December until a confirmation of the new US government's inflationary economic policies is received," said Joseph Capurso, senior currency strategist at CBA.
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