SYDNEY: The Australian and New Zealand dollars hit one-month lows on the yen on Monday as the case strengthens for the Bank of Japan to end negative rates as soon as next week, while investors await a key US inflation report that could sway June rate cut bets.
The Aussie fell 0.3% to 97.15 yen, the lowest since mid-February, while the kiwi slipped 0.2% to 90.60 yen, the weakest level since early February.
With all of the action in yen thanks to data showing an upward revision to Japan’s economy, the Antipodean currencies were subdued against the dollar after hefty gains last week.
The Aussie was little changed at $0.6620, having jumped 1.5% last week, its biggest weekly gain this year.
It had a volatile reaction to a mixed US jobs report on Friday, which had sent the currency to as high as $0.6667 before ending the day little changed.
The kiwi was hovering at $0.6176, after rising 1.1% last week to as high as $0.6217. It faces resistance at the February high of $0.6218, while support is around the 200-day moving average of $0.6078.
The Australian and New Zealand dollars had been pressured since the start of the year, but they caught some breath this month as risk assets rallied on growing confidence the Federal Reserve is on track to cut interest rates in June, with commentary from Chair Jerome Powell last week and US jobs data supporting the view.
“It has put an end to the dollar’s strong start to 2024, and suggests to us that the greenback will remain on the back foot in the near term,” Capital Economics analysts said.
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“However, we continue to think a sustained period of dollar weakness is unlikely, given the US economy still looks in considerably better shape than other major economies.”
Much will be riding on the US consumer inflation report on Tuesday.
Down Under, both Westpac and National Australia Bank will publish their monthly consumer sentiment and business surveys on Tuesday.
Reflecting the prospects of near-term global rate cuts, Australian bond yields hit the lowest in more than a month.
The three-year yield slipped 3 basis points (bps) to 3.599%, after falling 9 bps the previous week.
Ten-year yields also fell 3 bps to 3.970%, having dropped 15 bps last week.
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