SYDNEY, Dec 1 (Reuters) – The Australian and New Zealand dollars were edging higher again on Tuesday, shaking off a bout of profit-taking as domestic economic news stayed upbeat and global commodity prices strong.
The Aussie firmed 0.3% to $0.7366, having reached a three-month peak of $0.7408 overnight only to meet stiff resistance at the September top of $0.7413. A break there would take it back to levels not seen since mid-2018.
The kiwi dollar pushed back up to $0.7037, having already reached its highest since June 2018 at $0.7051. The currency surged 6% in November and overbought technical signals point to the need for some consolidation.
Australian economic data were again upbeat with a revival in house prices and home building boding well for economic recovery now the nation is largely coronavirus-free.
The Reserve Bank of Australia (RBA) noted the run of better news while leaving rates at 0.1% after its December policy meeting on Tuesday.
Having eased policy in November, analysts assume it will be on hold for at least a few months to see how growth fares.
“The lesson globally has been that activity bounces back sharply once virus control is achieved and containment restrictions are eased,” NAB economist Tapas Strickland said.
“Encouraging news on vaccine trials suggests the medium-term outlook for growth will also continue to improve.”
Australia’s relative economic success has kept 10-year bond yields up at 0.92%, while U.S. yields have drifted down to 0.85%, widening the Aussie’s rate advantage.
Also supporting the currency has been strength in prices for some of Australia’s major export earners.
“The commodity story remains incredibly supportive for the A$ with copper, aluminium and iron ore all surging on expectations of ‘green waves’ of investment,” said Richard Franulovich, head of FX strategy at Westpac.
However, he cautioned the latest diplomatic brawl with China could lead to further tariff action by Australia’s single largest export market.
(Editing by Himani Sarkar)