The New Zealand dollar popped higher on Tuesday after a surprisingly high reading on domestic inflation blunted the, already modest, chance of a cut in interest rates and pushed bond yields up.
The kiwi firmed 0.4 percent to $0.6575, putting some ground between the recent 32-month trough around $0.6424.
Government data showed consumer price inflation rose 0.9 percent in the September quarter, topping the 0.7 percent expected on rising petrol costs and a weakening currency.
The annual pace of 1.9 percent was almost back at the Reserve Bank of New Zealand's (RBNZ) mid-range target of 2 percent, narrowing the scope for an easing in policy.
However, the bank's own preferred measure of core inflation stayed at 1.7 percent in the third quarter, suggesting there was no rush to tighten policy either.
The Aussie dollar was dragged a fraction higher by the kiwi to $0.7137, but again met stiff resistance around $0.7150.
Australian government bond futures eased in line with Treasuries, with the three-year bond contract off 2 ticks at 97.870. The 10-year contract dipped 3 ticks to 97.2650.
Interest rates futures slipped in response while bond yields rose 2 to 3 basis points.