Aussie and Kiwi Gain on Higher Yields

Both Australian and the New Zealand dollars gained today on a presumption that the international investors bought Australia’s and New Zealand’s government bonds as their premiums yield more than their U.S. and Japanese counterparts.

Yield differentials have been the major advantages of Aussie and kiwi for quite a while now. But yesterday and today the difference between Australian and U.S. two-year government notes reached the highest value in about four years, while New Zealand’s bonds spread with Treasury’s reached the highest value in more than 15 years.

The lifted rate difference continue to act as the attractor to both carry trade enthusiasts and the less conservative bond investors that aren’t afraid of the possible global economy slowdown.

The Australian dollar rose to 0.8811 from 0.8759 against U.S. dollar and to 98.25 from 97.80 against Japanese yen. The New Zealand dollar advanced from 0.7727 to 0.7745 against U.S. dollar ant from 85.57 to 86.30 against Japanese yen.

Whether it is a New Year’s start optimism or poor fundamental data coming from the United States, but something is clearly adding a confidence to the carry traders world-wide, even on a still low Forex trading volumes.

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