SYDNEY/WELLINGTON: The Australian and New Zealand dollars fell near multi-month lows on Friday as Asian equities took a beating in a tense market ahead of key US labour data.
The Aussie slipped 0.8 percent on the day to $0.9485, pulling closer to a 20-month low of $0.9427 hit on Thursday.
It looked set to end the week lower for the fifth consecutive time, showing a decline of around 1 percent.
The kiwi dropped to $0.7966, having touched an 11-month low of $0.7902, but was still on track to show a 0.6 percent gain so far this week. Support was seen around $0.7940.
The Antipodean currencies were hard-hit on a trade-weighted basis with the Aussie plunging to 72.2, its weakest in 20 months. The kiwi index was not far behind at a five-month trough of 74.34.
Most of the damage was driven by sharp falls in Asian stocks with Japanese equities skidding more than 2 percent as investors grew wary of the Japan government's growth strategy.
The drop in equities has been driving up the yen and threatening to undo the Bank of Japan's stimulus efforts.
As a result, the Aussie sank to a five-month low of 90.81 yen to show a loss of 5 percent this week, the biggest weekly decline since September 2011.
The Aussie dollar also plumbed fresh multi-year lows against the euro, pound and Swiss franc.
All eyes were on key US non-farm payrolls data at 1230 GMT with forecasts for a rise of 170,000 jobs.
Any disappointment could dent growing talk the Federal Reserve will soon dial down its super easy monetary policy.
The US dollar has been rallying against the Antipodeans in recent weeks on the belief that improving data would prompt the Fed to roll back its $85 billion per month bond buying programme.
For the Aussie, however, the job report could trigger further losses, regardless of the outcome.
"(Even if) the jobs number is weak, there are chances the Aussie will be lower because it will turn into a risk off session," said a trader at a European bank in Singapore.
"So net-net, it's not looking good for the Aussie," he said, seeing the local dollar slipping to $0.9388, the 2011 trough.
Some of the recent pressure on the Aussie dollar came in part from expectations the Reserve Bank of Australia will cut interest rates again in the wake of disappointing economic growth data at home.
Swap rates have sharply narrowed the odds of a rate cut next month, implying a 60 percent chance of an easing to a fresh record low of 2.5 percent, compared to just 20 percent earlier in the week.
Interbank futures are almost fully priced for a move by September.
In contrast, the next rate move by the Reserve Bank of New Zealand is expected to be higher, a rarity among western nations.
The prospect of more rate cuts sent Australian government bonds futures higher, with the three-year contract rallying to 97.560, the highest since October.
Three-year cash yields plumbed as far as 2.45 percent, the lowest in six months, while the spread between two-year Australian and US sovereign bonds hit its weakest in nearly one year.
The 10-year contract jumped 0.085 points to 96.745.
New Zealand government bonds were firm, sending yields as much as 5 basis points lower along the curve.
Comments
Comments are closed for this article.