SYDNEY: The Australian and New Zealand dollars eased on Thursday but held on to most of their hefty gains on the yen as the Japanese safe-haven currency succumbed to rebounding risk appetite after fears about a global banking crisis eased.
The Aussie was 0.2% lower at $0.6675, after dipping 0.4% overnight to as low as $0.6662, weighed lower by a downward surprise in the monthly inflation data that helped strengthen the possibility of a pause in rate hikes next week.
Support now lies at $0.6668. It is, however, holding onto most of the 1.1% gain against the Japanese yen overnight and was hovering at 88.57 yen, as investors wound back some of the safety positions built up in the last couple of weeks.
The kiwi dollar slid 0.3% to $0.6208, just above the 21-day moving average of $0.6199. It eased 0.5% overnight to as far as $0.6625.
It also maintained most of its 1.0% gain overnight against the Japanese yen at 82.44 yen.
Overnight, risk sentiment was boosted after US officials appeared before Congress and focused remarks on failures at Silicon Valley Bank and its supervision, rather than broader systemic issues across the financial sector.
However, that failed to lift the Antipodean currencies, with traders more preoccupied with the domestic rate outlook.
National Australia Bank on Thursday lowered the peak rate call for the Reserve Bank of Australia to 3.85%, down from 4.1% previously. That leaves ANZ as the only major Australian bank to still forecast a terminal rate of 4.1%.
“Further out, we continue to see rate cuts in H1 2024 bringing the cash rate back to 3.1% as the economy slows and unemployment rises,” said Alan Oster, chief economist at NAB.
Australia, NZ dollars on defensive as bond yields keep sliding
However, the labour market remained tight, with data showing that job vacancies were still far above pre-pandemic levels, despite falling for the third straight quarter in the three months to February.
Belinda Allen, an economist at Commonwealth Bank of Australia, said she expected the unemployment rate to lift from here, adding that other indicators of labour demand have softened from high levels.
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