SYDNEY/WELLINGTON: The Australian and New Zealand dollars stood near 10-month peaks on Wednesday after fading concerns about global growth and rising metal prices sparked demand for carry trades.
The Australian dollar took a breather at $0.7785 after investors opted to book profits, having flown to $0.7827 on Tuesday, a high not seen since June.
It has climbed two cents in three sessions with the next major resistance found at $0.7849. A break of this would put the next target at the May 2015 peak of $0.8164.
Martina Song, a strategist at Westpac Bank expects further appreciation given rising iron ore prices, Australia's top export earner.
The value of the mineral has jumped 16 percent so far this month and, if sustained, would post a third consecutive monthly gain. Underpinning the Aussie, up 7 percent this year, is demand for carry trades amid ultra-loose policies in Japan and Europe and a cautious US Federal Reserve.
Investors were awaiting the outcome of the European Central Bank's (ECB) policy meeting on Thursday with expectations it will stand pat following last month's bold easing moves.
The New Zealand dollar paused at $0.7015, having touched a 10-month peak of $0.7055 on Tuesday.
Helping the kiwi, up two cents since Monday, was a rise in global dairy prices
The fortnightly global dairy sale showed prices rose for the second consecutive auction as volumes dropped. "Kiwi broke the psychological $0.70 number amid a positive 'risk' session," ANZ analysts said in a research note.
"The auction lifted and kiwi continues to look like its heading for resistance near $0.72." New Zealand government bonds eased, sending yields 3 basis points higher at the long end of the curve.
Australian government bond futures were quiet, with the three-year bond contract steady at 98.030.
The 10-year contract rose 2 ticks to 97.4600, while the 20-year contract was flat at 96.8850.
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