WELLINGTON/SYDNEY: The Australian and New Zealand dollars remained under the cosh against their US counterpart on Wednesday, weighed by cross selling in the euro, but managed to recover further ground against the yen.
The Aussie eased 0.3 percent on the day to $1.0350, having plumbed a one-month low of $1.0291 on Monday. It has lost 1.4 percent so far this week and remained a long way from a three-month high of $1.0585 touched last week.
Traders said the move lower followed the breach of a key level in the euro-yen which triggered losses in the euro-Aussie.
Initial support was found at $1.0350, the 50-day moving average (MA), with sellers seen at $1.0414, the 100-day MA. Buyers were reported around $1.0330.
The New Zealand dollar slipped to a session low of $0.8460 after a restrained reading of consumer prices disappointed some investors who were positioned for a rate hike later this year.
Data showed New Zealand consumer prices came in line with expectations with a 0.4 percent increase in the first quarter and 0.9 percent from a year ago, an outcome below the central bank's target band of 1 to 3 percent.
The Reserve Bank of New Zealand said it expected to keep rates on hold this year at a record low of 2.5 percent, though it issued a stark warning earlier this month about a possible rate hike should housing prices continue to rise.
Market pricing implies a 50-50 percent chance of a rate increase in the next 12 months.
Helping cap losses in the kiwi was another rise in global prices of dairy, New Zealand's top export earner. The prices jumped to their highest in nearly five years, boding well for the economy.
The kiwi was off Monday's low of $0.8378, but still down 1 percent so far this week. It was also a fair way from a 20-month peak of $0.8676 set Thursday. Immediate support was found at $0.8450.
The Antipodean currencies also struggled against the euro and Swiss francs, hitting fresh multi-week lows.
The common currency rose as far as A$1.2739, its highest since early March, while it advanced to a three-week peak of NZ$1.5555 against the New Zealand dollar.
Yet, the Aussie and kiwi dollars extended gains versus the yen which skidded nearly 1 percent against the US dollar .
The Aussie rose 0.4 percent on the day to 101.90, pulling closer to five-year highs of 105.43 touched last week.
Both Aussie and kiwi dollars plunged as much as 4 percent earlier in the week, the largest one-day loss in two years. They have been gradually recovering but were still 1.3 percent lower since Monday.
Ray Attrill, global co-head of currency strategy at National Australia Bank, forecasts the Aussie dollar will fully recover from a wild fall on Monday as a result of the Bank of Japan's aggressive monetary stimulus campaign.
"The recent setback (in the Aussie) provides a better level to make Japanese investors think about buying Australian assets again," said Attrill.
The kiwi dollar gained 0.3 percent on the day to 83.23 yen, following a 2 percent jump on Tuesday. It scaled a five-year peak of 86.43 last week.
Australian debt futures were mixed with the yield curve flattening. The three-year contract eased 0.020 points to 97.280, while the 10-year contract added 0.010 points to 96.755. Both contracts jumped to four-month highs on Tuesday.
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