The Aussie dollar is soaring against the Kiwi, logging its largest gain in over 2 years

Photo by Mike Heydon/Jet Productions NZ Limited via Getty Images

The Australian dollar pushed higher on Thursday, benefiting from a decline in US bond yields and buying against the New Zealand dollar.

Here’s the scoreboard as at 7.45am AEDT.

AUD/USD 0.7878 , 0.0034 , 0.43%
AUD/JPY 88.68 , 0.11 , 0.12%
AUD/CNH 5.2042 , 0.0112 , 0.22%
AUD/EUR 0.6646 , -0.0008 , -0.12%
AUD/GBP 0.5989 , 0.005 , 0.84%
AUD/NZD 1.1208 , 0.0245 , 2.23%
AUD/CAD 0.9835 , 0.0059 , 0.60%

After opening at .7844, the AUD/USD had a topsy-turvy session in Asia, initially rising following the release of yet another strong Australian jobs report for September before giving back most of those gains as Chinese GDP growth disappointed at 6.8%.

While in line with economist forecasts, markets have become accustomed to this figure coming in ahead of expectations.

However, the Aussie regained its footing in European and US trade, rising modestly on the back of a fall in US bond yields. A report from website Politico suggesting Donald Trump is leaning towards appointing Jerome Powell as the next chair of the US Federal Reserve also helped underpin the Aussie.

Powell is regarded as being less hawkish than other candidates currently under consideration.

Traders largely overlooked strong US economic data released during the session, including news that initial jobless claims fell to the lowest level since 1973.

AUD/USD Hourly Chart

Along with US dollar weakness, the Aussie also found support from buying against the New Zealand dollar following the surprise decision from NZ First leader Winston Peters to form a coalition government with the New Zealand Labour Party.

“We see enhanced political and economic risk to the economy as NZ First campaigned on slashing immigration, reducing offshore ownership of key assets and broadening the RBNZ’s mandate away from the ‘sole’ 2% [inflation] target,” said Annette Beacher, Chief Asia-Pac Macro Strategist at TD Securities.

The AUD/NZD is currently up 2.23% at 1.1208, leaving it at the highest level since April 2016. The Aussie is currently on track to record it’s largest one-day percentage move against the Kiwi since September 2015.

AUD/NZD Daily Chart

After a flurry of activity on Thursday, the data calendar slows to a crawl on Friday, likely ensuring that politics, policy speeches and sentiment will dictate the Aussie’s direction.

“The focus is regional in the political sphere for both China and NZ, while tonight markets will watch developments in the EU-UK negotiations,” said analysts at ANZ Bank.

Outside of politics, markets will also hear from US Fed chair Janet Yellen, along with FOMC member Loretta Mester, later in the session. Both will deliver speeches on Saturday morning along Australia’s eastern seaboard.

On an otherwise quiet data calendar, the highlights today include Canadian CPI and retail sales along with existing home sales from the United States.

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