SYDNEY/WELLINGTON: The Australian and New Zealand dollars were deep under water on Wednesday as jitters over global growth and falling commodity prices conspired to send the Antipodeans to fresh lows.
The New Zealand dollar was nursing losses after dairy giant Fonterra cut sharply its forecast payout to dairy farmers, the nation's top export earners.
The kiwi skidded to $0.8065, having shed nearly one percent on Tuesday to its lowest in more than a year at $0.8042. It has fallen 8 percent since a peak in July, partly due to expectations the Reserve Bank of New Zealand (RBNZ) will not hike rates again until next year.
Fonterra, the country's largest dairy business, slashed its forecast payout for the current season by nearly 12 percent from its previous forecast made only six weeks ago because of a slump in prices.
The projection means national income will be cut by more than NZ$5 billion. "These data reinforce a profile of a softening in GDP growth rates over the year ahead, a likely longer pause to the RBNZ's tightening cycle into the June quarter of 2015, together with further downside risks to the NZ dollar," said First NZ Capital's director of economics and strategy Chris Green. Major technical support was found at $0.7947, the 76.4 percent retracement of the $0.7670-$0.8839 rally.
Trade data for August offered a prop to the kiwi, surprising with a markedly lower-than-expected deficit and an annual surplus at its highest level in 22 years.
New Zealand government bonds were unchanged.
Across the Tasman sea, the Australian dollar stood at $0.8855, having struck a fresh seven-month low of $0.8839.
It found little consolation from a Reserve Bank of Australia (RBA) report highlighting concerns about rising home prices and rapid growth in mortgages for property investment. This is a major reason the market has priced out almost any chance of another cut in interest rates.
The Aussie has shed more than 5 percent so far this month, largely due to a stronger US dollar on speculation that the US Federal Reserve will hike interest rates sooner rather than later. Also undermining the Aussie was a big drop in the prices of iron ore, Australia's top export earner, and nickel.
Australia revised down its forecast iron ore price for 2015 to $92.40 a tonne, from $94.60 a tonne, citing mounting competition among producers as supply rises. Sentiment for the commodity currency remained bearish with some dealers expecting negative news from China.
"The best you can hope for, for the Aussie in the near term, is small short-covering rallies," said Sean Callow, senior currency strategist at Westpac, seeing the currency capped at $0.8905.
Charts show no significant support until the year's trough at $0.8660.
Australian government bond futures slipped, with the three-year bond contract off 3 ticks at 97.160. The 10-year contract lost 2.5 ticks to 96.385.
Comments
Comments are closed for this article.