Australian and Kiwi rally stagnates as RBA stabilizes bond market

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SINGAPORE, Oct. 22 (Reuters) – The Australian and New Zealand dollars halted a sparkling rally on Friday as commodity prices cooled and a sharp drop in Antipodes bond markets eased with the intervention by the Reserve Bank of Australia to defend its return target.

The Aussie was last up 0.1% to $ 0.7472, supported by news that struggling developer China Evergrande would avoid default by finding funds for a late payment and by the end of it. of a long COVID-19 lockdown in Melbourne.

The kiwi rose 0.1% to $ 0.7166, although it was hurting after suffering its biggest drop in a fortnight on Thursday.

Both currencies pulled back sharply overnight from multi-year peaks against the yen. The pullbacks halted a week-long rally that ousted short sellers and pushed the antipodes more than 3% above the greenback.

“At this point it looks more like a rebalancing than the start of a new downtrend,” ANZ Bank analysts said in a note, adding that the kiwi could remain supported.

However, in Australia, the RBA fired a warning shot at markets which had started to challenge the bank’s insistence on keeping rates stable until 2024.

The RBA came in with an offer to buy AU $ 1 billion of its April 2024 target government bond, reducing the yield to 0.14%, after hitting 0.21% – against a target of 0 , 1%.

“It’s a reminder that the RBA is still here,” said Sean Callow, currency analyst at Westpac.

“I think if they had just continued to sit idly by and let the markets move away from it, it would have made people get aggressive about the RBA policy change in November.”

Prices for coal, iron ore and most metals have also fallen sharply amid rapidly changing Chinese supply and demand prospects.

New Zealand government bonds stabilized on Friday, with a 10-year yield at 2.448% after briefly hitting an almost three-year high of 2.463%.

Australian government bond futures eased slightly, with the 3-year bond contract falling 2 ticks to 99.050 and the 10-year 3-tick contract to 98.155. (Reporting by Tom Westbrook; Editing by Kim Coghill)


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