The Australian and New Zealand dollars stayed near 7-month lows on Friday in thin trading as investors wound down ahead of the Christmas holidays. The Australian dollar was up 0.14 percent at $0.7226, after hitting a trough of $0.7198, a level not seen since May 31. The New Zealand dollar stood at $0.6908, edging up for a second day after six sessions of heavy losses.
Both of the currencies have fallen in six out of their last ten sessions and are set for their second straight weekly loss. They have been particularly hard hit since early November after Donald Trump scored an upset win in the US Presidential elections, sending Treasury yields and the dollar soaring on expectations US growth and interest rates will step up a notch next year.
The Aussie has erased all of the gains made this year after climbing as much as 6.5 percent before the November 8 election. On top of this, data this month showing the economy shrank for the first time since 2011 - raising the spectre of a possible recession - has also weighed on the currency. The Aussie is set to finish 2016 down 0.8 percent - its fourth straight year of losses.
Traders say the near-term outlook for the Aussie appears gloomy, with the next stop seen at $0.7150. Key resistance lies at 73 US cents, a breach of which could spur a small rally. It has, however, fared better against the yen, thanks to carry trade where investors borrow in safe-haven low-yielding currencies for high-yielding assets such as the Aussie and the Kiwi.
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