The Australian and New Zealand dollars held near one-month peaks on Wednesday, buoyed by monetary policy expectations and higher commodity prices such as iron ore. The Australian dollar edged down to $0.7448, within reach of a peak of $0.7465 on Tuesday. It soared 1.2 percent in the last session after the Reserve Bank of Australia (RBA) wrong-footed Aussie bears with the omission of a clear easing bias in its monthly policy review statement. The New Zealand dollar was steady at $0.6974 after getting dragged higher by the Aussie dollar overnight.
New Zealand government bonds eased, sending yields around 0.5 bps higher across the curve. Australian government bond futures held near highs, with the three-year bond contract up 2 ticks at 98.420. The 10-year contract also rose 2 ticks to 97.8300, close to an all-time peak touched on Tuesday, while the 20-year contract gained 3 ticks to 97.2400. The central bank on Tuesday kept rates at a record low of 1.75 percent, taking a pause after last month's cut and recent data showing reasonable strength in the economy.
"The Aussie remains well supported by a combination of neutral RBA policy, general dollar weakness, and rally, fragile as it may be, in risk assets," said Stephen Innes, senior currency trader at FX and CFD firm OANDA Australia and Asia Pacific. Investors trimmed the risk of a cut in interest rates in August, with interbank futures implying less than a 50-50 chance of a move, from 64 percent on Tuesday. Capping the Antipodeans was a fall in China's exports and imports. The Asian giant is Australia and New Zealand's top export market.