The New Zealand dollar rose to seven-week highs on Wednesday boosted by a solid rise in dairy prices, while yen softness helped the Australian dollar stay near three-week peaks. The New Zealand dollar popped to $0.6556, its highest since late August, after global dairy prices leapt 10 percent at an auction held by giant co-operative Fonterra.
"We view rebounding dairy prices as challenging the need for further immediate interest rate cuts given that low dairy prices were a huge reason behind the Reserve Bank of New Zealand cutting rates in June, July and September," said Con Williams, agri-economist at ANZ. The kiwi had already gained nearly 1 percent on Tuesday and last stood at $0.6543. A break of $0.6556 would target $0.6685. The kiwi rose to 78.81 versus the yen, the highest since August 24, while the Aussie popped above 86 yen, from a low of 82.76 touched last week.
The Australian dollar held near a three-week high at $0.7156, having gained 1.1 percent on Tuesday when the Reserve Bank of Australia (RBA) disappointed some by offering a neutral statement at its policy meeting. Interbank futures modestly pared back the chances pf an easing by December to 40 percent from 50. They are, however, still fully priced for a quarter-point-cut by early next year.
Resistance for the Aussie was found at $0.7183 and a break would target a double top around $0.7275. Australian government bond futures eased, with the three-year bond contract off 1 tick at 98.200. The 10-year contract shed 1.5 tick to 97.3500. New Zealand government bonds were softer, sending yields 1.5 basis points higher along the curve.