Australia, NZ currencies under pressure again as dollar dominates
SYDNEY, Oct 23 (Reuters) -The Australian and New Zealand dollars were again under pressure on Wednesday, having caught some respite overnight as favourable yield spreads drew buyers as the two hovered at multi-month lows.
The Aussie AUD=D3 slipped 0.2% to $0.6668, having rebounded 0.4% overnight to pull away from a six-week low of $0.6648. The level of $0.6650/60 is proving to be a key support area ahead of the 200-day moving average of $0.6628, while resistance is at 67 cents.
The kiwi dollar NZD=D3 fell 0.1% to $0.6036, after bouncing 0.2% overnight to move away from a two-month low of $0.6020. The technical outlook is more bearish for the kiwi as it still has not managed to stand above the 200-day moving average of $0.6090.
In the broader foreign exchange market, the U.S. dollar is hitting fresh 2-1/2-month peaks on the back of surging Treasury yields thanks to hedging before the U.S. presidential election and bets for less aggressive Federal Reserve easing in the months ahead.
That also led traders to wager there is just a 20% chance the Reserve Bank of Australia will cut rates this year given a slew of upside surprises in the labour market, with the first easing not fully priced in until May next year. 0#RBAWATCH
That has helped Aussie outperform against the low-yielding yen at 101.04 yen AUDJPY=R, just below a three-month top.
Three-year Australian bond yields AU3YT=RR climbed another 2 basis points to 3.944%, the highest in three months. Ten-year bonds yielded AU10YT=RR at 4.45%, the highest in 3-1/2 months and also some 23 bps above their Treasury counterparts.
"It seems reasonable to now characterise AUD in 2024 to date as a '0.635 – 0.69' currency, having spent only brief interludes outside this range," National Australia Bank analysts said. "This should carry us through year end, barring extreme market ructions out of the US elections."
Traders are waiting for details about the upcoming National People's Congress meeting in Beijing, with the Commonwealth Bank of Australia noting that it is increasingly likely investors will have to wait until November to find out about new economic stimulus.
"The lack of clarity on the NPC's timing could pull AUD/USD up on the idea that the longer it takes to announce the NPC dates, the larger the support package being planned," said Joseph Capurso, head of international economics at CBA.
Across the Tasman Sea, traders still see a decent risk - about 25% - that the Reserve Bank of New Zealand could step up its easing again at its last meeting of the year in November with a 75 basis point move, a weight on the kiwi. 0#RBNZWATCH
Reporting by Stella Qiu; Editing by Jamie Freed
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
