The Australian dollar stood tall on Wednesday in contrast to its New Zealand cousin, which skidded following a disappointing jobs report and weaker global dairy prices. The Australian dollar held at $0.7197, from Tuesday's low of $0.7110 and well off a recent three-week low of $0.7067. Key resistance was found at $0.7225.
The Aussie was in consolidation mode, having bounced a cent-and-a-half since late last week. Part of the strength came after the Reserve Bank of Australia (RBA) wrong-footed bears by skipping a chance to cut interest rates at its policy meeting on Tuesday. Data released on Wednesday showed the trade deficit narrowed to A$2.3 billion in September, from A$3.1 billion in August, while retail sales added 0.4 percent in September.
The Aussie held hefty gains on the euro and yen, having risen around 1 percent on Tuesday, while it jumped more than two full New Zealand cents in 24 hours to NZ$1.0816. The kiwi dollar, in contrast, slid to $0.6646 against its US counterpart, peeling back from highs near 68 US cents set in the past three sessions. The kiwi had already been knocked when global dairy prices fell at a second consecutive auction. Milk is New Zealand's top export earner. Support was found at $0.6620. New Zealand government bonds were mixed, with yields 2.5 basis points lower at the short end of the curve.
While the market pushed back the risk of a December rate cut by the RBA to 26 percent, the margin between 10-year and 3-year government bond yields grew to 85 basis points, the widest since mid-September. Australian government bond futures held near three-week lows, with the three-year bond contract off 1 tick at 98.140. The 10-year contract shed 3.5 ticks to 97.2550, while the 20-year contract fell 4 ticks to 96.6900.
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