New Zealand dollar on track for best month since 2013

[SYDNEY] The Australia and New Zealand dollars opened the week higher on Monday, as optimism about a vaccine-driven global recovery led the currencies to their highest levels in months and put the Kiwi dollar on track for a monthly gain of over 6 per cent.

The New Zealand dollar opened at US$0.7046, its highest level since July 2018, and 0.1 per cent higher than its Friday close of US$0.7035.

It had paired back some gains to be flat in the afternoon, on track for 6.3 per cent gains in November, the most in a month since September 2013, as investors scaled back expectations for more policy easing given the risk of surging house prices.

"The recovery in global equities to record highs and the outlook seemingly more promising with the emergency of a vaccine seems very encouraging and that has pushed both growth-sensitive currencies higher, particularly this month, but the Kiwi has outperformed pretty clearly," said Westpac Banking Corp senior currency strategist Sean Callow.

Helping sentiment on Monday was a survey showing factory activity in China handily beat forecasts in November, leaving blue chips 6.6 per cent higher for the month.

The Australian dollar was 0.06 per cent higher at US$0.7333 on Monday, after reaching US$0.7408 earlier in the session, the highest in three months. The Aussie is on track to close November 5.1 per cent stronger, its largest monthly gain since April.

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Investors expect data on Wednesday will show Australia's economy has rebounded sharply from its first recession in three decades, according to a Reuters poll.

They will also keep an eye on commentary from the Reserve Bank of Australia, which is expected to hold its cash rate at a historic low of 0.1 per cent on Tuesday.

New Zealand government bonds rose slightly with yields on the long-end down 3 basis points.

Australian government bond futures were flat, with the three-year bond contract unchanged at 99.83 and the 10-year contract one tick higher to 99.11.

REUTERS