Australia, NZ dollars rise as Brexit anxiety eases slightly

[SYDNEY] The Australian and New Zealand dollars rose against the greenback and yen on Monday, underpinned by improved risk appetite as momentum swung towards Britain remaining in the European Union ahead of this week's referendum.

Three opinion polls before Thursday's vote showed the'Remain' camp gaining some traction, although the overall picture remained one of an evenly split electorate.

"If the UK does remain within the EU then we assume a risk-on vibe will dominate markets, to send the Australian dollar higher against the greenback and in particular against the yen," said Matt Simpson, senior market analyst at ThinkForex.

Some of that risk-on sentiment can already be felt. Equity markets across much of Asia were higher, while demand for commodity currencies was also strong.

The Aussie climbed 0.6 per cent to US$0.7439, continuing to pull away from last Thursday's trough of US$0.7286. It rallied 1.1 per cent on the yen to 77.82.

Its kiwi counterpart rose 0.7 per cent to US$0.7103 and was 1.3 per cent higher on the yen at 74.33.

Markets had been fearing that a vote for Britain to leave the EU would create a fresh bout of global market instability.

Unsurprisingly, sterling was the star performer, rising against all of its peers. It reached a two-week high of A$1.9652 and touched a peak of NZ$2.0605, a level last seen more than a week ago.

Safe-haven government bonds trimmed gains, resulting in slightly higher yields. New Zealand yields rose 2 basis points at the short end and 3.5 basis points at the long end.

Australia's three-year government bond futures slipped 3 ticks to 98.460, recoiling from an all-time high of 98.570 set on Friday. The 10-year contract fell 5.5 ticks to 97.8600, also retreating from a record high of 98.0100.

"Rates would likely rally a lot further on a Brexit vote, while a win for Remain would likely see a retracement of the fall in yields seen over recent weeks," said Jason Wong, BNZ FX strategist.

REUTERS