SYDNEY: The Australian and New Zealand dollars held firm on Thursday as the risk-leveraged currencies maintained their recent close correlation to US equities, where tech stocks hit record highs overnight.
The Aussie stood at $0.6975 having got as far as $0.6995 earlier before again failing to clear the $0.7000 chart barrier. Support comes in around $0.6925/30.
The kiwi dollar steadied at $0.6568 after touching $0.6583, a whisker from the June peak of $0.6585. A break there would take it to ground last trod in late January.
Both have been tracking US stocks as a barometer of global risk appetite, firming even as Australia has suffered a new outbreak of coronavirus that all but shut down its second largest city of Melbourne.
Yields on 10-year bonds are at 0.90%, having spent the past month in a 0.84% to 0.977% range.
Three-year yields have been steady around 0.26% for weeks with the Reserve Bank of Australia (RBA) committed to keeping them near 0.25% for some years to come.
The lockdown is set to temper an expected rebound in economic activity this quarter, after what is likely to be a vicious contraction in the June quarter.
It will also eat into already strained tax revenues and likely prompt further fiscal stimulus, adding to debt. The government is due to release an update on the budget and new policy measures on July 23.