SYDNEY, March 1 (Reuters) – The Australian and New Zealand dollars recovered against the greenback on Monday after risk currencies fell late last week amid a sell-off on global bond markets.
The Aussie dollar was 0.69% higher at $ 0.7759, but still well below a three-year high of $ 0.8007 reached on Feb 25.
The Kiwi dollar was 0.66% higher at $ 0.7273 but down from the $ 0.7464 level it also reached on February 25, which was the highest since August 2017.
The currencies of Australia and New Zealand have risen in recent months due to a combination of soaring commodity prices, as well as the recovery of their domestic economies and housing markets from the COVID-19 crisis.
But optimism about the global economic recovery, supported by unprecedented fiscal and monetary stimulus, has fueled concerns about inflation and monetary tightening, sending rising global bond yields and weighing on riskier currencies.
“A number of Australian states have retreated from a recession sparked by last year’s lockdown and are growing at a pace above the trend … with vaccination launches now underway, the road to normalization looks more secure,” said Richard Yetsenga, chief economist at ANZ.
Australian debt, following a sell-off in global bond markets last week, is also rebounding from some of the biggest price losses in years seen on Friday.
The yield on the 10-year Australian 10-year bond fell 11 basis points to 1.64% after hitting 1.97% on Friday, the highest since May 2019 and up from below 1% in early January.
“Even though the prospect of nominal growth is rapidly improving, the central bank remains firmly committed to maintaining very accommodative policies,” added Yetsenga. “AUD and NZD have been the main beneficiaries of this trade, so far.”
New Zealand’s central bank governor on Friday reiterated that the bank will maintain its current easy policy setup for an extended period of time, saying it was wise to be patient.
Edited by Ana Nicolaci da Costa