The New Zealand dollar jumped to its highest since mid-2018 on Tuesday as investors scaled back wagers of more policy easing by the country's central bank given the risk of surging house prices there.
The kiwi dollar was up 0.7% at $0.6967 NZD=D3 , after reaching a top of $0.6985 and clearing resistance around $0.6969. The Aussie dollar rose in sympathy to reach $0.7310 AUD=D3 .
The move came after Finance Minister Grant Robertson said the government had sought advice from the Reserve Bank of New Zealand (RBNZ) on how it could help stabilise property prices.
Robertson has proposed including stabilising house prices as a factor for consideration in the central bank's remit when formulating monetary policy.
The market took that to mean the RBNZ might have less scope to ease policy further, given interest rates were already at all-time lows and the housing market was running hot.
The bank has in the past mused about taking rates below zero, but investors have now largely priced out such a prospect.
Swap rates quickly moved to imply less chance of another easing at all RBNZWATCH , while yields on 10-year bonds NZ10YT=RR climbed 7 basis points to 0.90%.
