SYDNEY: The Australian and New Zealand dollars edged higher on Tuesday, helped by selling in the yen after the Bank of Japan held its ultra loose policy steady, although the two were still stuck in familiar ranges, recoiling from resistance.
The Aussie rose 0.2% to $0.6720, after hitting a fresh five-month high of $0.6736 overnight before giving up most of the gains and ending the day little changed.
It faces resistance around $0.6728, a level that it has attempted to breach three times in the past week, after a rally of more than 7% from October.
The kiwi dollar was also 0.2% higher to $0.6225, having also retreated from an overnight high of $0.6250, which is the resistance for now.
In one of the last central bank actions this year, the Bank of Japan on Tuesday maintained its ultra loose monetary settings in a widely expected move, although that still pushed the yen 0.5% lower.
The broad weakness in the yen helped the two Antipodeans higher, with the Aussie and kiwi gaining 0.6% and 0.7% on the yen, respectively.
“There were a few (in the market) that were hanging on to the idea that they would change today,” said Joseph Capurso, head of international economics at the Commonwealth Bank of Australia.
“I don’t think they’re going to. What will change our mind is if we see big increases in wage gains in Japan. They’re just two weak at the moment. So I cannot see that happening anytime soon.”
Down Under, minutes from Reserve Bank of Australia’s December policy meeting showed the central bank considered hiking interest rates but decided there were enough encouraging signs on inflation to pause for more data.
Markets have since moved to price out any further hikes, in part due to a recent dovish turn from the Federal Reserve.
Futures see a 6% chance of another hike in February when policymakers meet next and imply two rate cuts by the end of next year.
The minutes also showed the board judged the RBA’s current approach of holding government bonds to maturity remained appropriate, but agreed to keep under active consideration the possibility of selling the bonds earlier.
Australian three-year yields rose 5 basis points to 3.77%, pulling away from a four-month low of 3.739% hit on Monday.
Ten years also bounced 4 bps to 4.117%, off a four-month trough.