Australian dollar hits 8-month high on cautious RBA, trade deal hopes
SYDNEY, July 24 (Reuters) - The Australian dollar hit an eight-month high on Thursday, aided by less dovish central bank speak and a rally in global stocks on trade deal optimism, while kiwi lagged a little behind.
Overnight, Wall Street extended its record breaking rally after the U.S.-Japan trade deal fuelled hopes for more deals. The euro crept towards the highest level in nearly four years as prospects for a deal with U.S. improved, while yen held onto gains, pressuring the greenback broadly. FRX/
The Aussie AUD=D3 edged up 0.2% to $0.6617, the highest since early November last year, having jumped 0.7% overnight. Resistance is heavy at $0.6687, while it remains to be seen if it can hold sustainably above 66 cents.
Three-year government bond yields AU3YT=RR rose 6 basis points to 3.442% after Reserve Bank of Australia Governor Michele Bullock on Thursday shrugged off concerns about a recent jump in the unemployment rate, saying that the central bank does not target a specific jobless rate.
Markets that had already been wrongfooted by RBA's last rate decision moved to pare back expectations for a rate cut in August to 85%, from 95% a day ago. For all of 2025, they saw a total easing of 60 basis points.
"The RBA Governor has elected to look through the recent criticism and downplayed the rise in employment," said Tony Sycamore, analyst at IG. "Her cautious tone resulted in about four to five basis points being priced out of the market before year end."
The kiwi dollar NZD=D3 also popped 0.1% higher to $0.6054, having gained 0.7% overnight, although it is still some distance away from its nine-month top of $0.6120.
In a speech, Reserve Bank of New Zealand chief economist Paul Conway said while the full impact of U.S. tariffs remains uncertain, they could ease medium-term inflation pressures in the country as countries redirect exports away from the U.S.
Markets now imply around a 75% probability the Reserve Bank of New Zealand will cut the 3.25% cash rate a quarter point at its meeting on August 20. 0#NZDIRPR
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