The Australian and New Zealand dollars hit multi-month highs on Tuesday as investors wagered on better times ahead for the global economy, a sentiment echoed by Australia's central bank as it kept interest rates unchanged.
The Aussie dollar was enjoying the view at $0.6795 having earlier scaled a five-month top at $0.6817. It surged 1.9% on Monday as a break of the March peak at $0.6685 triggered a wave of stop-loss buying, further encouraged by clearing the 200-day moving average at $0.6658.
The kiwi dollar stood at $0.6285 after reaching an 11-week high of $0.6306. It had climbed 1.4% on Monday amid a broad improvement in risk appetite as more economies reopened.
Australia and New Zealand have had more success than many in containing the coronavirus and are steadily restarting sectors, from restaurants and gyms to museums.
The Reserve Bank of Australia (RBA) ended its monthly policy meeting on Tuesday by holding rates at 0.25%, as expected, and sounded a fraction more upbeat, saying the recession might be a little less dire than first feared.
Australian data for the March quarter on Tuesday showed strength in international trade and government spending, but a drag from wages and inventories, leaving it touch and go whether the economy contracted or not.
Median forecasts for first quarter GDP data due on Wednesday are for a dip of 0.3%, which would pull annual growth down to 1.4%. That would be the first fall since early 2011, but just a taste of the huge decline likely in the current quarter.
"While we have also become more optimistic about the outlook for the economy in recent weeks, we still expect the unemployment rate to jump to nearly 9% by Q3," said Marcel Thieliant, senior Australia economist at Capital Economics.
"Given that 10-year government bond yields remain close to 1%, the RBA should be able to provide additional stimulus by lowering them further," he added. "We expect a fresh round of government bond purchases at the August meeting."
That would mark a big shift for the central bank given it has only purchased bonds once in the past month.
Yields on three-year debt remained glued to its target of 0.25% and it has shown little inclination to pull 10-year yields down from their current tight trading range around 0.90%.
Futures for 10-year bonds eased 1 tick to 99.1050 on the RBA statement, suggesting investors were not pricing in more bond buying for the moment.
(Editing by Jacqueline Wong)
