By Stella Qiu
SYDNEY, May 5 (Reuters) - The Australian dollar jumped
to a two-week high on Friday after the central bank warned of
upside risks on inflation, while the kiwi also benefited from
wagers on ever-higher domestic interest rates.
The Aussie rose 0.6% to $0.6735, breaking through a
major resistance level of the 200-day moving average of $0.6730.
It had made a modest gain of 0.3% overnight as the prospects
of Federal Reserve pausing kept the U.S. dollar in check.
The Antipodean was heading for a weekly gain of 1.8%,
supported by Tuesday's surprise hike from the Reserve Bank of
Australia (RBA) and its Friday warning of the upside risk to
inflation after maintaining that it was only projected at the
top of a target band of 2% to 3% by mid-2025.
The kiwi was up 0.5% at $0.6308, the highest in
three weeks, after rallying 0.8% overnight. Strong jobs data on
Wednesday added to the case for another interest rate hike from
the Reserve Bank of New Zealand this month.
Working against the two currencies are persisting concerns
about the health of the U.S. banking sector, which have sent
investors scrambling for safe assets.
Analysts at ANZ expect one final hike from the RBA in
August, as services inflation is likely to prove sticky and
getting inflation back to target in a reasonable time is key.
"Any easing in rates is some quite considerable time off
based on our read of the economy," they told clients in a note
on Friday.
Markets, however, are wagering rates are at their peak, due
in part to renewed banking volatility and even cuts by year-end. Three-year bond yields slid 2 basis points at
2.982%, while ten-years were 2 bps higher at 3.339%.
(Reporting by Stella Qiu; Editing by Clarence Fernandez)
