The Australian and New Zealand dollars hovered near multi-month lows on Tuesday as traders wagered interest rates in the two countries will stay at record lows for some time yet compared to the steady pace of tightening by the US Federal Reserve. The Australian dollar held at $0.7376, within spitting distance of a 1-1/2 year trough of $0.7311 touched earlier this month.
The New Zealand dollar traded at $0.6786 from a near two-year low of $0.6759 set in July. The losses in the antipodeans came as longer-dated Treasury yields jumped on bets the Fed will stay on its tightening path despite US President Donald Trump bemoaning an appreciating currency. In line with global debt, New Zealand government bonds eased, sending yields 4 basis points higher at the long end of the curve.
Australian government bond futures slipped to one-month lows, with the three-year bond contract off 3 ticks to 97.83. The 10-year contract fell 5 ticks to 97.275. The dollar's index, which measures the greenback against a basket of major currencies, has strengthened 2.7 percent so far this year compared to a near 10 percent drop in 2017. The disparity in policy outlook between the United States and other major economies has been the primary driver of a buoyant dollar this year.
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