The Australian held hefty gains on the euro and yen on Wednesday after the Reserve Bank of Australia's (RBA) decision to stand pat on policy encouraged a mix of short-covering and carry trades.
The Australian dollar nudged up to $0.7646, having climbed more than 1.5 percent at one stage on Tuesday after the RBA skipped the chance to cut rates. Resistance was found at this week's high of $0.7711. Against the euro, yen and pound, the Aussie regained some altitude.
"There is no debate about the monetary policy outlook for the Bank of Japan and the European Central Bank," said Sean Callow, a senior currency strategist at Westpac. "It's just a case of how much more (stimulus) and how long will it continue."
The Aussie edged up to 91.95 yen, well away from last week's low of 90.15. Resistance was found around 92.40 yen.
With 10-year Japanese government bond yields hovering near 0.3 percent and mounting speculation the Bank of Japan may pump more money into the economy, it is no surprise Australia's 10-year yields of 2.3 percent draw attention from carry trade investors.
The euro eased to A$1.4160, having shed 1.5 percent on Tuesday. Support was found at A$1.4116 and resistance at A$1.4248. The Aussie last traded at NZ$1.0165 from a peak of NZ$1.0216 after the RBA decision. Near term support is seen around NZ$1.010.
Against the US dollar, the kiwi was subdued at $0.7515 after a push to $0.7565 in the slipstream of the Aussie proved short-lived.
New Zealand government bonds were softer, pushing yields up to 3 basis points higher.
Australian government bond futures steadied after falling sharply on Tuesday when the RBA disappointed bond bulls. The three-year bond contract edged up 1 tick to 98.300, having touched a record high of 98.420 on Tuesday.
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