The Australian and New Zealand dollars scaled fresh multi-month peaks on Tuesday as markets priced in an ever-more optimistic outlook for global recovery, though the size of recent gains drew profit-taking at the peaks.
The Aussie edged back to $0.6998 AUD=D3 , having climbed as far as $0.7043 at one point. That briefly cleared the December top at $0.7032, opening the way for a test of a peak from July last year at $0.7082, which now marks major resistance.
The New Zealand dollar also paused at $0.6549 NZD=D3 , after reaching its highest since late January at $0.6580.
Both currencies have been on a tear as progress on re-opening economies, at home and abroad, led markets to wager on quick recoveries, even if much of the data is still depressed.
Figures out on Tuesday showed Australian business activity and confidence improved in May after huge declines in April, but were still at depths usually associated with recession.
Job ads also stabilised in May after a record drop the month before, but again suggest the labour market will be weak for some time to come.
New Zealand has just removed all restrictions on domestic movement as the disease was essentially eliminated in the country, though its borders remain closed.
The rally in risk assets has seen yields on Australian 10-year bonds AU10YT=RR jump around 20 basis points in the past week to 1.07%. Three-year yields AU3YT=RR have edged up just a little to 0.28%, though that is slowly moving away from the Reserve Bank of Australia's (RBA) target of 0.25%.
So far, the RBA has seemed comfortable with the move and not offered to buy bonds for more than a month.
"The selling pressure across the curve is coming from offshore, with Treasuries selling-off heavily last week," said analysts at ANZ in a note.
"With the 3-year ACGB yield the most it has been above the target since late March, we think there is a material chance the RBA might decide to make purchases this week."
Any buying was likely to be concentrated in the three-year to five-year part of the curve, they added.
The Reserve Bank of New Zealand (RBNZ) has been far more active, purchasing around 20% of all NZ government bonds on issue since April.
Yet 10-year yields NZ10YT=RR have still risen sharply to around 0.99%, from less than 70 basis points in late May.
