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Australia, NZ dlrs near 10-mth highs vs sterling

Published 24/02/2016, 12:37 pm
Australia, NZ dlrs near 10-mth highs vs sterling

By Cecile Lefort and Charlotte Greenfield

SYDNEY/WELLINGTON, Feb 24 (Reuters) - The Australian and New Zealand dollars stood tall against a battered pound on Wednesday, while edging back against their U.S. counterpart as sliding oil prices weighed on risk assets.

Fears Britain might leave the European Union kept sterling pinned near 10-month lows at A$1.9428 GBPAUD=R , having dropped 6 pence since Monday. It stood at NZ$2.1093 GBPNZD=R , having shed nearly 3 percent in as many sessions.

Against the U.S. dollar, the Aussie AUD=D4 eased to $0.7200, from $0.7216 early, but remained not far from a seven-week peak of $0.7259 touched on Tuesday. Support was found at $0.7158.

It has gained 1.7 percent this month, having proved resilient to global growth worries and falling oil prices.

Chris Weston, chief market strategist at IG Markets, forecasts a push to 74 U.S. cents thanks in part to Australia's relatively high interest rates.

Australian 10-year government paper AU10YT=RR pays around 70 basis points more than U.S. Treasuries US10YT=RR and is AAA-rated.

The New Zealand dollar NZD=D4 fell back to $0.6634, from a high of $0.6726 the previous day, as oil prices and global shares stumbled.

"NZD bore the brunt of risk sentiment overnight," said ANZ analysts in a research note. "The session was dominated by weakening risk sentiment."

The kiwi was expected to trade between $0.6630 and $0.6730, according to analysts.

New Zealand government bonds 0#NZTSY= gained, sending yields 1.5 basis points lower along most of the curve.

Australian government bond futures were little changed, with the three-year bond contract YTTc1 steady at 98.230. The 10-year contract YTCc1 was flat at 97.5800, while the 20-year contract YXXc1 was also steady at 97.0450.

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The spread between 10- and 3-year government bonds AU3YT=RR AU10YT=RR narrowed further to 63 basis points, the smallest in 10 months.

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