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Updated November 20th, 2023 at 10:40 IST

Australian dollar hits 3-month high, NZD nears one-month top

The Aussie climbed 0.6% to a three-month high of $0.6555, extending a hefty gain of 2.4% from last week.

Thomson Reuters
Australian Dollar
Australian Dollar | Image:Unsplash
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The Australian dollar made a three-month high and the New Zealand dollar neared a one-month top on Monday, gaining on bets that US rates have peaked and getting an extra boost from a firm yuan, as they are often traded as proxies for the Chinese currency.

The Aussie climbed 0.6 per cent to a three-month high of $0.6555, extending a hefty gain of 2.4 per cent from last week. It, however, faces heavy resistance at the 200-day moving average of $0.6592, and support is at around $0.6446.

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The Kiwi dollar also jumped 0.7 per cent to $0.6034, just a whisker away from a one-month high of $0.6055 hit last Wednesday. It climbed 1.8 per cent last week.

The two - which already benefited from a benign US inflation report - moved higher on Monday after the Chinese central bank fixed the daily mid-point for the yuan at 7.1612 per dollar, its strongest level since August. The onshore yuan gained more than 0.3 per cent.

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The two Antipodeans are often retreated as liquid proxies for the Chinese currency yuan given their economies' reliance on the Chinese market.

"It does look as though the jump in the yuan played a key role in the Aussie's break to fresh highs since 10 August," said Sean Callow, a currency strategist at Westpac. The bank sees the Aussie reach 66 cents by the year's end.

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Meanwhile, traders are looking ahead to two public appearances by the Reserve Bank of Australia Governor Michele Bullock this week and the release of minutes from the RBA's November policy meeting on Tuesday.

Markets still reckon the RBA's tightening campaign is all but over, although there is a 30 per cent probability for one last hike in the cash rate to 4.5 per cent early next year.

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Australian bonds pared back some of last week's stellar gains. Benchmark 10-year government yields rose 3 basis points to 4.495 per cent after a weekly decline of 17 basis points, while three-year yields increased 4 bps to 4.116 per cent.

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Published November 20th, 2023 at 10:40 IST

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