New Zealand dollar breaks to 4-month peak, Aussie lags a little

[SYDNEY] The New Zealand dollar celebrated a fresh four-month peak on Wednesday aided by heightened risk appetite globally, while its Australian counterpart was still wrestling with stiff resistance atop 80 US cents.

The kiwi was taking in the view at US$0.7362, having finally broken the US$0.7330 chart barrier after several days of struggle.

"The NZ dollar has been supported by buoyant global risk appetite, recent rises in dairy prices and probably some short-covering activity," said Nick Smyth, a strategist at BNZ.

"The US dollar is generally weaker again, with Trump's imposition of tariffs seemingly the latest excuse to sell the dollar," he added.

US President Donald Trump this week slapped steep import tariffs on washing machines and solar panels, a move that stirred fears in Asia of more protectionist measures coming out of Washington.

The kiwi faces a domestic hurdle on Thursday with the release of consumer price figures for the fourth quarter.

Median forecasts are for a 0.4 per cent rise in consumer prices for the December quarter, leaving annual inflation running at a tame 1.9 per cent.

Anything softer would only reinforce expectations the Reserve Bank of New Zealand will not be hiking rates for many more months to come.

The kiwi also outperformed its Australian cousin, which slipped 0.6 per cent overnight to NZ$1.0853 and put at risk the January trough of US$1.0841.

The Aussie fared a bit better against the unloved US dollar, bouncing to US$0.8005 from a low of US$0.7957 on Tuesday.

Yet it has now spent six sessions trying to break resistance above US$0.8030 with no success, leaving it vulnerable to a deeper pullback.

"The uptrend appears less powerful after the Aussie faltered in front of US$0.8040/50, suggesting more retracement towards US$0.7925/50," wrote analysts at Westpac in a note.

Australian government bonds regained some ground in line with US Treasuries, where strong demand at an auction of two-year paper supported sentiment.

The three-year bond contract added 2 ticks to 97.755, while the 10-year contract rose 2.5 ticks to 97.1900.

New Zealand government bonds gained, sending yields around 5 basis points lower at the long end of the curve.

REUTERS