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Australia, NZ dollars gain as greenback sputters
[SYDNEY] The Australian and New Zealand dollars rose on Monday as the greenback weakened and investors unwound previous bets the Federal Reserve would hike US interest rates at an aggressive pace this year.
The Australian dollar inched 0.25 per cent higher to US$0.7719, a level not seen since Feb 23. The Aussie made hefty gains last week, rising 2 per cent to post its best weekly performance since Jan 13.
The New Zealand dollar climbed 0.33 per cent to US$0.7036, its highest since March 2. The Kiwi also posted strong gains last week, up 1.3 per cent.
"Though the bounce was a reflection of US dollar weakness, the Aussie is also getting a double whammy benefit from high commodity prices," said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.
The US central bank last week delivered an interest rate hike, as anticipated, but did not alter its earlier forecast for a total of three rate increases this year.
That disappointed US dollar bulls who had hoped for hints of a possible fourth hike and for more aggressive forecasts for next year.
Chinese iron ore futures last week boasted their biggest weekly gain in two months underpinned by strength in steel prices.
"The big question is whether the Aussie can kick higher or whether 77 cents is going to continue to be a graveyard for the bulls," said Mr McKenna.
The Aussie has faced stiff resistance in the US$0.7700/7740 band since early February and has repeatedly failed to break above.
There was limited initial reaction to the Group of 20 meeting over the weekend which retained the familiar form of words on currency intervention but dropped a pledge to avoid trade protectionism.
New Zealand government bonds gained, sending yields across the long-end of the curve down four basis points.
Australian government bond futures rose too, with the three-year bond contract up two ticks at 97.940. The 10-year contract added 4.5 ticks to 97.140.