SYDNEY, Nov 23 (Reuters) - The New Zealand dollar climbed to
a two-year peak on Monday as domestic data on retail sales blew
past all expectations, quashing the risk of further policy
easing and underlining the currency's yield attraction.
The kiwi dollar jumped 0.4% to $0.6961 and cleared
peaks from January and March 2019. It was now tantalisingly
close to a $0.6969 high from December 2018, a break of which
would take it to levels not seen since June of that year.
The Australian dollar was dragged higher in its wake to
reach $0.7320, though that was short of recent peaks
and major resistance at $0.6939.
The gains came as data showed real retail sales in New
Zealand boomed by a record 28% in the third quarter, recovering
strongly from an historic 14.6% drop the previous quarter when a
strict coronavirus lockdown crippled consumption.
That was far above market expectations and suggested upside
risk to the gross domestic product (GDP) report for the third
quarter due next month.
"Today's result is another tick in that column, highlighting
the resilience in household spending appetites," said Satish
Ranchhod, a senior economist at Westpac.
"This also highlights the effectiveness in monetary and
fiscal stimulus in supporting demand through what has been a
trying time for the economy."
Indeed, so robust has been the recent run of data that
investors have sharply scaled back expectations for further
easing by the Reserve Bank of New Zealand (RBNZ) and all but
given up on the chance of negative interest rates.
As a result, yields on 10-year bonds have surged
to 0.82%, from just 0.56% at the start of the month. In turn,
the spread with U.S. 10-year yields has swung from -34 basis
points to zero and removed one drag on the kiwi.
The spread with Australian bonds has gone much the same way,
toppling the Aussie to NZ$1.0520 from a high of
NZ$1.0760 early in the month.
Australian 10-year yields were at 0.86%, having
backed away from a recent peak at 1.00%. Three-year bond futures
held at 99.830, near the Reserve Bank of Australia's
(RBA) 0.10% target for cash yields.
(Editing by Shri Navaratnam)