The Australian dollar inched higher on Tuesday following 4 straight days of losses, after the country's central bank indicated it was done cutting interest rates for now. The Australian dollar was up 0.14 percent at $0.7253 but still near 6-1/2-month lows of $0.7241 touched earlier. The Aussie has shed all of its gains this year after being 6.5 percent higher in early November.
The Aussie did well against its New Zealand counterpart, rising 0.1 percent, although the cross has been trapped in a tight band. It climbed on the yen after the Bank of Japan maintained its aggressive asset buying campaign which has acted to keep short-term yields deep in negative territory. The New Zealand dollar slipped for a fifth straight day to a six-month low of $0.6923.
The antipodean currencies were also on the backfoot following attacks in Germany and Turkey at a time when investors are less likely to want to take risks heading into the Christmas holiday season. "Momentum remains negative, thanks to the post-Fed surge in the US dollar last week, with the next major multi-day target around the 0.6800 area," Westpac's currency strategist Imre Speizer said.
New Zealand government bonds gained, sending yields 4 basis points lower at the long end of the curve. Australian government bond futures were mixed, with the three-year bond contract up 1 tick at 97.95 and the 10-year contract up 2.5 ticks at 97.125. The Federal Reserve increased interest rates last week while signalling a faster pace of hikes next year, sending both Treasury yields and the greenback soaring.