SYDNEY: The Australian and New Zealand dollars were headed for weekly gains on Friday following a rally in equities and commodities, while revived bets for an outsized US rate cut next week also weighed on the greenback.
The Aussie held at $0.6727, having jumped 0.7% overnight to move further away from a one-month low of $0.6620 hit earlier in the week.
It is set for a weekly gain of 0.8%, with support at the 200-day moving average of $0.6619.
There is scope for it to rebound back to 68 cents, a level it has failed to breach multiple times in the past two months.
The kiwi dollar nudged 0.1% higher to $0.6185, having also rebounded 0.7% overnight.
It is headed for a small 0.3% rise for the week, with resistance at $0.6253.
The two have benefited from a rebound in risk appetite this week evidenced in the gains in global equities and commodity prices, with fears of a US downturn subsiding a little.
Details of US producer price data overnight showed price pressures were still easing, supporting the case for imminent rate cuts.
A large half-point rate cut from the Federal Reserve this month is back on the table, with CME FedWatch tool showing a 43% chance for a such move, compared with just 14% a day earlier.
That weighed on the dollar broadly, especially against the Japanese yen.
Australia, NZ dollars find support as risk sentiment steadies
“With volatility falling, global equities elevated, and interest rate cuts brightening the outlook for the world economy, the USD can continue to drift lower in coming months,” said Joseph Capurso, head of international economics at the Commonwealth Bank of Australia.
Also aiding the two Antipodeans is news that China’s President Xi Jinping on Thursday urged authorities to achieve economic targets after a slew of data renewed concerns about the world’s second largest economy.
Prices for iron ore - Australia’s biggest export - rebounded 2% on Thursday, although the near term risk is Chinese activity data due on Saturday.
Australian bond yields tracked the declines in Treasury yields on Friday as odds narrowed on a 50 bp cut from the Fed next week.
Three-year bond yields fell 6 bps to 3.447%, the lowest since early August.
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