The Australian and New Zealand dollars scaled 10-month peaks on Tuesday after a sudden reversal higher in oil prices boosted risk appetite, sending the yen and government bonds lower. The Australian dollar climbed to $0.7784, its highest since June, having bounced two cents since hitting a low earlier this month. It traded at $0.7774 with next major resistance found at $0.7849. A break would target the May 2015 peak of $0.8164.
The Aussie is up nearly 7 percent this year, largely due to ultra-loose policies in Japan and Europe and a cautious US Federal Reserve which have boosted the appeal of higher-yielding currencies. "It's game on for the Aussie. We may see the Aussie pushing through the $0.7800 level," said Stephen Innes, senior trader at FX and CFD firm OANDA Australia and Asia Pacific.
The Aussie and kiwi dollars bounced against a soggy yen, while the euro and pound pulled close to multi-month lows. The New Zealand dollar sped up to a peak of $0.6995, benefiting from global "risk on" sentiment as oil prices stabilise, said Stuart Ive of OM Financial Ltd. It last traded at $0.6981, with resistance at $0.7040. New Zealand government bonds eased, sending yields 3.5 basis points higher at the short end and 2 basis points higher at the long end. Australian government bond futures dipped, with the three-year bond contract off 6 ticks at 98.030. The 10-year contract fell 7.5 ticks to 7.4350, while the 20-year contract shed 6 ticks to 96.8800.