The Australian and New Zealand dollars were on a roll on Wednesday as optimism about a vaccine-led global economic recovery boosted commodity prices and bond yields.
Strong Chinese demand for steel lifted iron ore prices to near their highest in more than six years, a windfall for Australia as the ore is its single largest export earner.
That helped the Aussie up to $0.7365 AUD=D3 , having finally cracked resistance at the previous November peak of $0.7340 to be almost 5% higher for the month so far.
The next barrier is a September top at $0.7413 and a break there would take it to territory last visited in August 2018.
The kiwi dollar extended its furious run to $0.6974 NZD=D3 and briefly traded above $0.7000 for the first time since mid-2018. It is up almost 5.5% for the month so far.
The latest gains came on Tuesday when the New Zealand government asked the central bank to consider the problem of surging house prices in its policy deliberations.
Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr on Wednesday noted the bank already took housing into account, but investors still assumed the added focus on red-hot house prices would impede further easing.
"The proposal to tweak the RBNZ's mandate to explicitly include house prices was read by market traders as a potential tightening of monetary policy," said Kiwibank chief economist Jarrod Kerr. "Further rate cuts were seemingly pushed to the edge of the table."
Overnight index swaps now imply around 8 basis points of easing by the end of 2021, compared to more than 25 basis points of cuts just a couple of weeks ago.
Longer-term bond yields shot higher as the curve steepened markedly. Yields on five-year paper NZ5YT=RR hit their highest since August at 0.385%, a world away from the -0.03% touched in late September.
Ten-year yields NZ10YT=RR reached their highest since July at 0.98%, having climbed 42 basis points so far this month.
Australian bonds are also feeling the heat with 10-year yields AU10YT=RR up at 0.944% having risen 10 basis points in just three sessions.
Three-year bond futures YTTc1 eased a little to 99.825, but are underpinned by buying from the Reserve Bank of Australia (RBA) which aims to keep yields near 0.10%.
