The New Zealand dollar climbed to a three-month peak on Wednesday, while its Australian counterpart drifted lower on falling commodity prices, having paid little attention to better-than-expected manufacturing data from China. The New Zealand dollar soared to $0.7118, its highest since early March, from $0.7036 the previous day. It was poised to show a gain of 3 percent in May, breaking three months of decline.
The Reserve Bank of New Zealand's six-monthly report on the country's financial stability had almost no impact on the currency, with the governor saying risks at home and abroad had lessened but that the bank was still wary. The love wasn't shared across the Tasman Sea with the Australian dollar down at $0.7450, from $0.7466 early, away from last week's peak of $0.7517. It was on track for a fall of 0.4 percent in May, the third month of losses.
The most-active iron ore contract on the Dalian Commodity Exchange dropped 3.2 percent, to be down around 30 percent since mid-March. The Aussie, however, outperformed a soggy pound which dropped to A$1.7132, the lowest in a month. Against the kiwi, it eased as far as NZ$1.8007, the lowest since mid-April. The pound has tumbled 4 percent so far in May and if sustained, it would be the largest monthly loss in one year against the New Zealand dollar.
Australian government bond futures hovered near six-month highs, with the three-year bond contract up 1 tick at 98.320. The 10-year contract edged up half a tick to 97.5850, while the 20-year contract was steady at 97.0200. The spread between Australian and US 2-year government bonds shrunk to 27 basis points, the smallest since 2001. New Zealand government bonds gained, sending yields 2 basis points lower.
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