The Australian dollar paused near a 3-1/2-month high against its New Zealand counterpart after six straight sessions of gains led by a recent rally in oil prices and on a subtle divergence in monetary policy stance between the two countries. The commodity-driven Australian dollar held at $1.0903 on the kiwi, the highest since early February, and was on track for a sixth consecutive winning week.
"The subtly different central bank stances together with recent relative commodity price movements on the back of oil's lift is keeping the AUD/NZD bid," economists at ANZ said in a note. The Aussie is closely linked to commodities as the country is a major exporter of iron ore, coal and LNG. Against the US dollar, the Aussie was flat at $0.7507, staying in a holding pattern since early May. For the week so far, it is down 0.4 percent.
The New Zealand dollar held at $0.6886, up 0.2 percent and well above a recent five-month low of $0.6851. For the week, the kiwi is down 1.1 percent, on track for its fifth straight weekly loss - the worst showing since mid-2015 when it fell for eleven consecutive weeks.
New Zealand government bonds eased, sending yields about three basis points higher across the long-end of the curve. Australian government bond futures were mixed, with the three-year bond contract flat at 97.710. The 10-year contract off 1 tick at 97.0550. Oil prices have surged to 3-1/2 year highs on strong demand, ongoing supply cuts led by producer cartel Opec and looming US sanctions against major crude exporter Iran.
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