The Australian and New Zealand dollars rose on Tuesday after an upbeat local business survey combined with firm iron ore prices. A weakening yen underpinned appetite for risk assets, which also helped the Australian and New Zealand currencies. The Australian dollar popped to $0.7620, from $0.7596 early, nearing a nine-month peak of $0.7723 touched late March. It received a boost after a survey showed Australian firms across most industries saw improving conditions in March, lifting an index of activity to its highest in eight years.
The survey reinforced expectations of a steady interest rate outlook, at least in the short-term. Interbank futures imply a less than 50-50 chance of an easing by June. Last week, the Reserve Bank of Australia (RBA) kept its cash rate at a record low 2.0 percent for a 10th straight policy meeting, citing evidence of continued growth at home. The bullish mood was enhanced by a rally in the price of iron ore, Australia's top export earner, which bounced nearly 5 percent on Monday. The yen's loss of momentum after its sharp gains in recent gains also helped the Aussie.
The Aussie gained 0.5 percent in the session to 82.37 yen, moving away from a one-month low of 80.64. Likewise, the New Zealand dollar climbed to 74.30 yen , having touched 73.16 last week, a level unseen since August last year. The New Zealand dollar was steady at $0.6869, but up from a low of $0.6792 on Monday. New Zealand government bonds eased, sending yields around 3 basis points higher across the curve. Australian government bond futures were off one-month highs, with the three-year bond contract 5 ticks lower at 98.160. The 10-year contract fell 6 ticks to 97.5350, while the 20-year contract shed 3.5 ticks to 96.9700.
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