The Australian dollar paused on Tuesday after soaring commodity prices propelled it to a two-week high, though it was still on track for its worst monthly performance since May. The Australian dollar held steady at $0.7487, following three consecutive sessions of gains.
Since the US presidential election on November 8 in which Donald Trump was victorious, the Aussie has lost 3.5 percent as the greenback jumped in line with yields on Treasury bonds. The Aussie is down 1.5 percent so far this month, set to post its second straight monthly loss. Over the past week, however, it has held its own against the US dollar aided by a sharp rebound in the price of iron ore and coal - Australia's two largest exports.
The New Zealand dollar held steady at $0.7079 after rising for three straight days. Analysts, however, felt the balance of risks was leaning against the kiwi. "The US dollar has had an impressive rise since the US election and has potential to rise further during the months ahead," said Imre Speizer, a market strategist at Westpac. "Against that, the NZ economy is strong and dairy prices have risen. Overall we are left with a bearish outlook for NZD/USD, targeting sub-$0.70." New Zealand government bonds inched higher, with yields down half a tick across the curve.
Australian government bond futures eased, with the three-year bond contract down 3 ticks at 98.080. The 10-year contract slipped half a tick to 98.3350. "The Aussie dollar is looking like a beautiful oasis over the short term," said Stephen Innes, senior currency trader at OANDA Australia and Asia Pacific. "Speculative Chinese monies remain the primary driver in base metals flows as the China retail crowd stockpile everything in sight ahead of the anticipated Trump fiscal boom."