The Australian dollar paused after three days of gains and its New Zealand cousin hovered near 1-1/2-week highs as the greenback suffered losses on speculation the US Federal Reserve will go slower on monetary tightening than previously thought. The Australian dollar held at $0.7624 from Thursday's high of $0.7638, the highest since November14. The New Zealand dollar held at $0.6890, not far from Thursday's high of $0.6905, a level not seen since November15.
The antipodean currencies are set to end the week higher for their best performance since early October. Overall, trading was quiet in a holiday-shortened week in the United States and Japan. The first Ashes cricket test between Australia and England that began on Thursday also served as a distraction for forex traders.
"In this holiday trading environment, broader risk appetite and moves in commodity prices should remain the main driver of the Australian dollar," ANZ said in a note to clients. Iron ore, Australia's top export earner, has risen nearly 16 percent so far this month on hopes of higher demand. Coal prices were well bid too. The US dollar is on track for weekly losses against most rivals. It remains under pressure after skidding on Wednesday following minutes from the Federal Reserve's latest policy meeting showing some policymakers fretting about stubbornly weak inflation.
The Australia and New Zealand central banks are set to keep interest rates at record lows of 1.50 percent and 1.75 percent respectively for a long time to come. New Zealand government bonds gained, sending yields 3.5 basis points lower at the long end of the curve. Australian government bond futures were mixed with the three-year bond contract flat at 98.070. The 10-year contract rose 1.50 ticks at 97.490.
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