The Aussie is often used as a liquid proxy for the yuan and had been under pressure recently on worries the yuan would come under pressure when China's individual annual quota for foreign currency purchases was reset this week. The Aussie lost 2.8 percent in January last year when the yuan tumbled amid heavy capital outflows.
It also did well against other currencies, rising 0.2 percent versus its New Zealand counterpart and 0.3 percent on the yen. Both the euro and the pound slipped on the Aussie. The New Zealand dollar was down 0.28 percent at $0.6895, but has solid chart support in the $0.6863/6890 zone. Australian government bond futures eased in line with US Treasuries, with the three-year bond contract down 4 ticks at 97.930. The 10-year contract was off 5.5 ticks at 97.1600.
New Zealand government bonds bucked the global trend and rose in price, sending yields about 4 basis points lower at the long end of the curve. "Of course these are early days, but to the extent that the news eases concerns of a possible repeat of last January's China's equity and CNY meltdown, that is good news for China and the AUD," said Rodrigo Catril, currency strategist at National Australia Bank. International milk prices posted their largest fall in three months in the first dairy auction of the year.