By Swati Pandey
SYDNEY, Dec 12 (Reuters) - The New Zealand dollar rose to a two-week high on Tuesday, adding to gains from the previous session when the government appointed a new central bank governor, while the Australian dollar held near a recent six-month trough.
The kiwi NZD=D4 climbed as far as $0.6937, a level not seen since late November. It rose more than 1 percent on Monday, the biggest daily percentage gain since mid-August.
The rally came after national pension fund chief Adrian Orr was named the new governor for the Reserve Bank of New Zealand (RBNZ) for a five-year term, starting March 2018. cheered the announcement as Orr, a former central banker, is seen a safe pair of hands who can likely avoid a radical shake-up of monetary policy when changes come into force next year.
A new Labour-led government has launched a review of the RBNZ's mandate, intending to add maximising employment as a policy goal alongside inflation. appointment should act to somewhat soothe foreign investor perceptions about the nature of the changes at the RBNZ after the election," JP Morgan analyst Ben Jarman said in a note to clients.
"Orr's return delivers continuity through the transition to the dual mandate," he added. "And his organizational experience may make it easier for him to wrangle a monetary policy committee with external members, as will be required under the new decision-making structure."
Orr's appointment sent the kiwi dollar to a more than two-month top against its Australian counterpart AUDNZD=R . The Australian dollar was last down 0.2 percent against the kiwi for its third straight session of losses.
Against the U.S. dollar, the Aussie AUD=D4 loitered around $0.7530, not far from a six-month low of $0.7501 touched last week.
The Aussie has been on a slippery slope since hitting a more than 2-1/2 year peak of $0.8125 early September. It has since posted weekly losses nine out of 13 times.
So far this year, the Aussie is still up 4.6 percent.
Investors next await a rate decision from the U.S. Federal Reserve as well as its policy outlook for 2018. The Fed is considered certain to raise rates on Wednesday and likely stick to projections for three more hikes next year.
Just two more increases would take U.S. rates above those in Australia for the first time since 2000.
New Zealand government bonds 0#NZTSY= were barely changed.
Australian government bond futures were mixed, with the three-year bond contract YTTc1 unchanged at 98.005. The 10-year contract YTCc1 added 2 ticks to 97.4450. (Editing by Kim Coghill)