The Australian dollar hovered near a one-month high on Friday while its New Zealand cousin held on to recent gains as positive US data and some optimism on coming Sino-US trade talks lured investors into risk assets. Safe haven Australian and New Zealand sovereign bonds were heavily sold off, sending yields to multi-week highs across the curve.
The Australian dollar was at $0.6809 at 0154 GMT after breaching overnight key chart resistance of $0.6800 for the first time since Aug. 1. For the weeks, the Aussie was up 1.1%. If that gain is sustained, the currency will have its best weekly performance since late June. The New Zealand dollar held at $0.6376 after hitting a 1-1/2 week top of $0.6395 overnight. For the week, the kiwi is up nearly 1%, on track for its best week since early July.
In New Zealand, yields on government bonds gained 5-7 basis points on the long-end of the curve.
Australian government bond futures slipped to multi-week lows, sending yields higher. The three-year bond contract fell 6.5 ticks to 99.185 while the 10-year contract was off 9.5 ticks to 98.93.
Investors cheered news on Thursday that the United States and China have agreed to hold high-level talks early in October, raising hopes for substantial progress in de-escalating the long, bitter trade conflict between the two.
"Although investors have become increasingly doubtful about President Trump's commitment to reaching a trade deal with China, any sign of even a temporary de-escalation is welcome by the markets in a deteriorating global economic environment," Raffi Boyadjian, senior investment analyst at XM said in a client note.
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