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Australian, New Zealand dollars ride risk rally, NZ boasts record bond sale
[SYDNEY] The Australian and New Zealand dollars rebounded sharply on Tuesday as ceaseless stimulus from the US Federal Reserve revived risk appetites, while New Zealand sold a record amount of bonds to outsized demand.
The Aussie firmed 0.7 per cent to US$0.6971, having already climbed almost 1 per cent overnight and away from a trough of US$0.67770. It now faces resistance at US$0.6986 and the recent 11-month peak of US$0.7069.
The kiwi dollar was up 0.5 per cent at US$0.6501 after recovering from a low of US$0.6381 on Monday. Resistance lies just above US$0.6500 and the recent five-month top of US$0.6585.
Both tracked a bounce in US stocks after the Fed said it would start purchasing corporate bonds as part of an already announced stimulus scheme, and launched its Main Street Lending Program for smaller businesses.
The Reserve Bank of Australia (RBA) on Tuesday used minutes of its June policy meeting to reiterate its commitment to supporting the economy for as long as necessary, while noting the downturn might not be as bad as first feared.
Data out Tuesday showed payroll jobs had started to slowly recover in May after April's record slide, though that is not likely to show in the official jobs report which is surveyed early in the month.
"Weekly Payrolls suggest we have passed the low point for employment," said Westpac economist Justin Smirk. "We are cautious before reading too much into the data but the improvement through the last four weeks is very promising."
Australia loosened lockdown restrictions before some other advanced nations as it succeeded in containing the spread of the coronavirus.
The major banks reported consumer spending on their payments cards continued to improve last week as more of the service economy re-opened.
ANZ said observed spending in the week to June 12 was up 6.1 per cent on the same period last year with eating out, entertainment and travel all picking up from deep lows.
Over in New Zealand, the government sold a surprisingly large NZ$7 billion (S$6.32 billion) of new 2024 bonds, twice the size of the previous record sale. Bids amounted to a huge NZ$14 billion, suggesting strong offshore demand for the debt.
That saw yields dip at the short end of the curve even as the longer end was pushed higher by the revival in global risk sentiment.