Australian dollar ease, New Zealand dollar near four-month top
The Australian dollar eased on Tuesday after the country's central bank opened the door to another cut in interest rates as early as February, while New Zealand's currency hovered near a recent four-month peak. The Australian dollar slipped 0.3% to $0.6867, drifting further away from Friday's top of $0.6939, which was the highest since late July.
Key chart resistance lies near a 200-day moving average of $0.6910, which is proving to be a major barrier. Tuesday's losses came after minutes from the December policy meeting of the Reserve Bank of Australia (RBA) showed the board was concerned that wage growth was too weak to revive either inflation or consumption.
Financial futures are pricing in a 50-50 chance of a 25 basis point cut to 0.50% in February. "December's Board minutes do little to dispel our view that the Bank will likely cut the cash rate again in February 2020," Citi economist Josh Williamson said in a note.
The New Zealand dollar was last up a shade at $0.6600, but was still below a four-month high of $0.6636 touched on Friday. Most major currencies were little moved on Tuesday as investors seek more details on an interim trade deal the United States and China struck last week. The deal, announced on Friday after more than two-and-a-half years of volatile negotiations, will involve some US tariff cuts on Chinese goods in exchange for increased Chinese purchases of some US goods.
New Zealand government bonds were a tad lower, sending yields about 2-3 basis points higher across the curve. Australian government bond futures were mixed, with the three-year bond contract up 2 ticks at 99.295. The 10-year contract eased half a tick to 98.83.
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