The Australian and New Zealand dollars hovered near one-week lows on Wednesday on broad US dollar strength after upbeat US housing data raised expectations of an interest rate hike by the Federal Reserve. The Australian dollar edged up to $0.7924, from a one-week trough below 79 cents. Yet, it was still well off a four-month peak of $0.8164 touched last week following four consecutive sessions of losses. Support was found at $0.7863 with resistance around $0.7970.
Even a sharp improvement in Australian consumer confidence failed to move Aussie bulls as markets focused on strong US housing data. The Antipodean currencies, however, recovered some ground against the euro after a European Central Bank official said they could temporarily increase quantitative easing. The euro slipped to A$1.4057, from A$1.4276 touched on Monday.
Versus the kiwi, it eased to NZ$1.5120, having climbed as far as NZ$1.5404 earlier in the week. Against its US counterpart, the New Zealand dollar nudged up to $0.7365, but remained within reach of a two-month low of $0.7318 touched last week. The kiwi had spiked to an overnight high of $0.7444 after a central bank survey saw a slight lift in inflation expectations which was seen cooling the chances of a near term rate cut.
New Zealand government bonds traded with an offered tone, sending yields up to 3.5 basis points higher. Yields on 10-year New Zealand bonds jumped to the highest this year at 3.78 percent. Australian government bond futures fell, with the three-year bond contract off 3 ticks at 97.860.
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