Australia, NZ dlrs Ease Back, Bonds Buried by Inflation Bets

0
61

SYDNEY, Feb 17 Reuters The Australian and New Zealand dollars stepped back from major resistance barriers on Wednesday as a jump in Treasury yields gave the U.S. dollar a reprieve, while domestic bonds took a beating amid fears of faster global inflation.

The Aussie eased to 0.7753 and away from a fourweek top of 0.7805. The failure to clear the January peak of 0.7819 could now see it test support around 0.7713.

The kiwi dollar slipped to 0.7198 and back from a sixweek peak of 0.7269. It also failed to break the January high of 0.7314, opening up a test of 0.7178 and 0.7136.

The U.S. dollar was benefiting from rising yields; it was not alone. Australian 10year yields climbed even more to hit 1.421, the highest since a brief spike during the market mayhem of last March.

Yields were up 20 basis points in just two days and widened the spread over Treasuries to 10 basis points, from 2 basis points late last week.

Threeyear yields remained pinned at 0.129 thanks to the Reserve Bank of Australias RBA continued commitment to supereasy policy.

RBA Assistant Governor Christopher Kent on Wednesday estimated the Aussie would have been 5 higher without those policies.

The spread between three and 10year yields widened to 129 basis points, the steepest curve since early 2014 and a potential boon to bank earnings.

Across in New Zealand, 10year yields shot to 1.558 having risen 18 basis points on Tuesday alone.

The market has been reconsidering how long the Reserve Bank of New…

LEAVE A REPLY

Please enter your comment!
Please enter your name here