SYDNEY/WELLINGTON, Nov 13: The Australian and New Zealand dollars loitered near two-month lows today as talk that the US Federal Reserve would soon start to unwind its massive stimulus programme pushed up Treasury yields and gave a boost to the greenback.
The Aussie struggled at $0.9305, having skidded as far as $0.9260 overnight, its lowest since mid-September. It has fallen 1 percent this week and charts warn of further downside.
Important chart support was seen around $0.9280 and $0.9220/25, and a clear break there could even result in a re-test of $0.8900.
The Aussie took a slight knock after government data showed Australian wages grew at their slowest pace in at least 16 years last quarter, suggesting inflation would be no bar to another cut in interest rates if needed.
Earlier, however, an upbeat reading on consumer sentiment showed rate cuts already delivered were doing their work, in part by driving up home prices.
The Aussie has been under pressure since solid U.S. Jobs data last week were taken as bolstering the case for the Fed to scale back stimulus as early as next month.
‘The debate over the timing of the Fed tapering and recent mixed to soft data in Australia are keeping the Aussie under pressure for now,’ said Su-Lin Ong, senior economist at RBC Capital Markets.
The Aussie was nursing losses against the euro, which jumped across the board on Tuesday, mainly thanks to a sharp rally against the pound after surprisingly weak UK inflation data made the market question the outlook for higher interest rates there.
The common currency was last at A$1.4446, having regained four cents since last week’s surprise rate cut by the European Central Bank.
The New Zealand dollar edged up to $0.8217, from a two-month low of $0.8168 on Tuesday, after the Reserve Bank of New Zealand reiterated it would start raising interest rates next year.
In a parliamentary committee, RBNZ Governor Graeme Wheeler also said the likely impact that higher rates would have on the kiwi dollar is a concern.
The kiwi dollar has gained around six cents since early August as markets priced in more aggressive rate rises for next year. Swap rates now imply a total of 92 basis points worth of tightening, from 81 basis points last week.
New Zealand government bonds eased on Wednesday, sending yields 2.5 ticks higher along the curve.
Australian government bond futures consolidated near recent lows with the three-year bond contract up 1 tick at 96.810.
The 10-year contract steadied at 95.755, having fallen as far as 95.730, its lowest since March 2012. A break below 95.600 would take it to a two-year low. (agencies)
Trending Now
E-Paper
Follow our WhatsApp channel