Australia, NZ dollars hold onto gains as risk appetite rebounds on China

SYDNEY: The Australian and New Zealand dollars held onto their recent gains on Tuesday, buoyed by a broad pick-up in risk appetite as markets clung onto hopes that China’s costly zero-COVID policy will eventually ease.

The Aussie was hanging at $0.6467, after rising 0.2% overnight, building on strong gains seen since Friday when speculation that Beijing will loosen anti-pandemic restrictions surfaced.

Resistance is at around 65 cents. The kiwi touched a seven-week high of $0.5951 on Tuesday, having also edged up 0.2% in the previous session.

Resistance is around $0.5988.

The two currencies, which had tumbled on concerns about global growth this year, have been edging higher in recent sessions as markets priced in a slowdown in the global tightening cycle, although near-term downsides remain with the United States expected to report its inflation readings on Thursday.

“The AUD is likely to trade in a wide range in the near term, tracking news on potential policy support out of China and swings in the USD/risk sentiment,” analysts at Barclays said.

“Domestic data is less likely to be driver with the RBA now behind us.” The Aussie did not react much to domestic surveys showing Australian businesses had another strong month for sales and profitability in October, though confidence eased.

In New Zealand, a survey from the Reserve Bank of New Zealand showed the near-term rate of inflation is expected to ease over the coming year but will be higher than previously predicted.

Australian government bond yields jumped following a move in the US Treasures market.

Yields on 10-year bonds jumped 12 basis points to 4.046%, the highest in two weeks. Yields on three-year bonds gained by a similar margin to 3.512%.

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