The Australian dollar strengthened on Wednesday, coming off a two-week low hit in the previous session, as renewed optimism about the health of the global economy gave a boost to risk appetite and commodity prices. The Australian dollar rose to $0.7648, away from a trough of $0.7587 touched on Tuesday when markets doubted US President Donald Trump could quickly implement his pro-growth plans.
"Risk appetite is resilient enough to avoid a meltdown," said Sean Callow, a senior strategist at Westpac, seeing the Aussie between 75 cents and 77 cents. The Aussie remained within sight of a four-month peak of $0.7750 touched last week. Resistance was found around $0.7655 with support at around $0.7590. Across the Tasman sea, the New Zealand dollar edged lower to $0.7005, from a peak of $0.7048 touched on Tuesday. It met heavy resistance around $0.7020.
On the downside, a break under $0.6994 would open a test to $0.6975. Like its Aussie cousin, it regained some ground against the yen at 77.86 yen, from a four-month low of 77.42 touched on Tuesday. Bonds lost some of their shine on improving risk sentiment, with New Zealand government bonds yields as much as four basis points higher at the long end of the curve. Australian government bond futures also retreated from multi-week highs, with the three-year bond contract off 3 ticks at 98.030. The 10-year contract also eased 3 ticks to 97.2300, while the 20-year contract fell 3.5 ticks to 96.6850. The difference between Australian and US 2-year government yields dropped to 45 basis points, the lowest in a decade.
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