SYDNEY, March 16 (Reuters) – Australian and New Zealand dollars remained unchanged against the green on Tuesday as the market waited to see if the U.S. Federal Reserve’s March 17 monetary policy decision dealing with the recent spike in bond yields.
The Aussie dollar traded just three basis points lower at $ 0.7752, between its seven-week range of $ 0.75 and $ 0.80. It is against $ 0.7787 and has support at around $ 0.7714.
The New Zealand dollar was unchanged at $ 0.7199, far from its 2 1/2-year high of $ 0.7464 on February 25, but also away from the recent $ 0.7100 pool on February 5.
“The market is very tight awaiting Fed’s decision, as the sharp shift in U.S. bond yields has become so important that the market needs to see what they intend to do,” he said. Steven Dooley, APAC money strategist at Western Union Business Solutions.
While some expect the Fed to try to settle bond markets – yields have gone up about 60 bps since the last Fed meeting – the consensus view is that Fed CEO Jerome Powell will not make changes in policy positions.
“However, if they start taking some form of policy action, such as buying bonds further down the curve to push yields lower, we would see the US dollar move much lower and higher Australian dollar press.
In Australia, the minutes of the March meeting of the central bank, where it was repeating rate hikes to at least 2024, were unlikely to spread on the frontier currency.
Australia’s three-year government bonds remained largely unchanged at 0.103%, far from the 0.188% that jumped to the end of last month at the time of global bond sales.
The three-year government bonds revenue contract was slightly lower at 99.73 while the 10-year contract was five-ticket higher at 98.255.
New Zealand government bonds were trading higher with a 6-8 basis point lower yield at the long end of the curve. (Reporting by Paulina Duran in Sydney; Editing by Christopher Cushing)