The New Zealand dollar rose on Tuesday as lockdowns in the...

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    The New Zealand dollar rose on Tuesday as lockdowns in the country were seen successfully lowering new COVID-19 infections, while the Australian currency was stronger after new data raised hopes its economy could avoid recession.

    The kiwi dollar was up 0.49% at $0.6949 NZD=D3 , the highest in over two weeks and not far off its monthly peak of $0.7088 on Aug. 4. That puts it on track for a monthly gain of 0.85%.

    The kiwi was also benefiting from weakness in the greenback, which was hovering near two-week lows on Tuesday ahead of U.S. jobs figures later in the week.

    Domestic sentiment in New Zealand, where interest rates are expected to be hiked as early as this year to cool down its economy, was "drifting back towards 'glass-half-full'", analysts at Australia and New Zealand Banking Group said.

    New Zealand health chief Ashley Bloomfield said public health measures in place were slowing the outbreak that broke a six month virus-free period, and cases would continue to decline.

    Across the Tasman sea, the Aussie was 0.19% higher to $0.7308 AUD=D3 , as new data showed a rise in government spending has provided a crucial boost to economic growth that may have helped the country dodge an imminent recession.

    The gains extended its rebound from the month's trough of $0.7106 on Aug. 20.

    The commodity-sensitive Aussie has support at around $0.7271 and economists expect economic output numbers due tomorrow will give the Reserve Bank of Australia (RBA) the confidence it needs to continue to taper its bond purchases.

    "We expect Q2 GDP to grow by 0.5% quarter on quarter... (and) expect the RBA to taper its bond purchases further in November," said Barclays Bank economists.

    "Still, the bank retains the flexibility to alter course in response to fresh data as it removes its crisis policy settings, especially in the face of additional and longer lockdowns."

    Bond prices were higher, sending New Zealand yields across the curve half a basis point lower 0#NZTSY= . The 10-year bond was yielding 1.745% NZ10YT=RR .

    The yield on the 10-year Australian benchmark bond AU10YT=RR fell one basis point to 1.155%, leaving it 12 basis points below U.S. yields.

 
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