Australian dollar gets a lift from kiwi, euro selling
TLT•The Australian dollar held at $0.6968 against the U.S. dollar after rising 0.3% overnight, supported by gains against the New Zealand dollar and euro. Australian 10-year yields rose to 5.408%, while markets wagered the Reserve Bank of Australia would hold rates in November.
1. Aussie gains against peers
The Australian dollar held at $0.6968 against the U.S. dollar on Tuesday, after edging up 0.3% overnight and moving away from a 13-week low of $0.6904. It gained 0.6% against the New Zealand dollar to NZ$1.2464 and was lifted indirectly by euro selling, which took the euro to A$1.6061, its lowest since late 2024.
2. Yields and rate outlook
Australian 10-year yields rose to 5.408%, near 15-year highs, while the spread over U.S. Treasuries narrowed to 10 basis points from 39 a month earlier. The Reserve Bank of Australia has raised rates by a full percentage point to 4.60%; markets wagered it would skip a November hike, but could raise rates to 4.85% early next year if inflation does not cool as hoped.
3. Kiwi and New Zealand bonds
The New Zealand dollar was at $0.5598 after touching a 10-month low of $0.5581. Swaps implied about a 58% chance of a quarter-point rate rise to 3.0% at the Reserve Bank of New Zealand’s October 28 meeting, while New Zealand’s 10-year yield spread over U.S. Treasuries reached -23 basis points.
