WELLINGTON/SYDNEY: The Australian and New Zealand dollars were holding above multi-month lows on Wednesday, but more thanks to technical short covering from deeply oversold levels than to any improvement in investor sentiment.
The Aussie dollar was looking shaky at $0.9425 in late trade, after failing to break above $0.9500 earlier. It had sunk as far $0.9321 in a wild session on Tuesday, its lowest since September 2010, amid heavy speculative selling.
"I expect the Aussie will remain heavy tonight and could get even lower if jobs data is weak," said Joseph Capurso, a strategist at Commonwealth Bank of Australia.
Australian employment data is due on Thursday with forecasts centring on a drop of 10,000 for May, as payback for a hefty increase of 50,100 the previous month.
Capurso said a weak reading could take the Aussie back under
$0.9370. Immediate resistance was found at $0.9498 and support at $0.9321, with studies suggesting further losses on top of an already whopping 13 percent since April.
The Aussie remained weak against the yen as a bounce of 0.8 percent to 91.21 yen was dwarfed by a 3 percent slide on Tuesday.
The local currency has shed 5 percent against the yen this far this month and technicals indicate yet more downside. Resistance was seen at 94.20, the 10-day moving average with a break above that level indicating a period of consolidation.
The story was much the same against the euro which has climbed 20 Australian cents in little more than two months to reach its highest since August 2011.
The common currency was hovering at A$1.4116 late Wednesday, having been as high as A$1.4237. Immediate resistance was found at A$1.4130, while a break below the 5-day MA of A$1.3764 pointing to a pause.
Against a trade-weighted basket, the Aussie dropped to 72.0, the lowest since Oct 2011 when it had slipped as far as 70.8. A break would take it to the lowest since Sept 2010.
Australian debt futures slipped with the three-year contract down 0.08 points to 97.355 and the 10-year contract off 0.075 points to 96.515.
The spread between 3 and 10-year government bond yields has widened out sharply in recent weeks, to reach a three-year peak of 86 basis points, largely driven by a sharp increase in longer-term US Treasury yields.
The New Zealand dollar edged up to $0.7875, pulling up from a near-12 month low of $0.7761. Likewise, it only partly recouped losses on the yen to stand at 76.15, from a five-month low of 74.82.
Support was seen around $0.7800, roughly around the trough hit in June last year, and a decisive break below would risk a fall towards $0.7500.
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