Australian dollar at 2-week top, kiwi rises on easy Fed bets

By Swati Pandey

SYDNEY/WELLINGTON, March 18 (Reuters) - The Australian and New Zealand dollars rose on Monday for a second straight session as the greenback eased on bets the U.S. Federal Reserve would keep policy accommodative at its meeting this week.

The Australian dollar jumped to a two-week top of $0.7115 from Friday's low of $0.7061.

The New Zealand dollar added 0.3 percent to a four-day high of $0.6865.

Both the currencies climbed 0.6 percent each last week.

Monday's gains come amid talk Fed policymakers will lower their interest rate forecasts, or "dot plots", to show little or no further tightening this year.

Also expected is more detail on a plan to stop cutting the Fed's holdings of nearly $3.8 trillion in bonds. The two-day meeting ends with a news conference on Wednesday.

"Expectations are for a continuation of the 'pause policy' but all dialogue will be closely monitored as usual and expect some gyrations in the market around the event," said Nick Twidale, Sydney-based analyst at Rakuten Securities.

The Aussie has been unable to break its 70-72 U.S. cents trading range seen most of this year with currency strategists suggesting a dovish tilt from the Reserve Bank of Australia (RBA) could send it below key support of $0.7000.

The RBA has left policy at a record low 1.50 percent since last easing in August 2016 and last month shifted away from its long-held tightening bias to put rate cuts back on the table.

Minutes of the RBA's March meeting are due on Tuesday and could provide further clues on the central bank's thinking.

Financial markets are expecting a cut as soon as August led by a deep property market downturn although the RBA has so far appeared sanguine about the economic outlook.

In New Zealand, investors are keenly awaiting figures on the country's gross domestic product due on Thursday, which is expected to show the economy bounced in the December quarter although the annual pace likely slowed further.

New Zealand government bonds gained slightly, sending yields about 1 basis point lower at the long-end of the curve.

Australian government bond futures were barely changed, with the three-year bond contract down half a tick at 98.510. The 10-year contract was unchanged at 98.02. (Editing by Sam Holmes)

2019-03-18 06:56:01

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