SYDNEY: The Australian and New Zealand dollars were suffering a case of whiplash on Thursday as a sudden change in market mood saw stocks swing back in the black and commodity prices ease, leaving the near-term direction uncertain.
The Aussie had paused at $0.7309, having bounced 0.7% overnight and away from support at $0.7265.
The 200-day moving average is just ahead at $0.7316, but the week’s top of $0.7440 is a distant target.
The kiwi dollar steadied at $0.6836, after gaining 0.5% overnight from support around $0.6800. Again, it remains well short of the week’s peak of $0.6926.
Both currencies gave back some ground to a rallying euro which reached A$1.5128, having hit a four-year trough of A$1.4554 just a few days ago.
The single currency was aided by market speculation Ukraine and Russia were making progress toward a peaceful solution, though that was very much just a hope.
In Australia, Goldman Sachs became the latest bank to bring forward its forecast for rate hikes, predicting moves in August and September rather than a just one hike in November.
The bank argues the recent spike in commodity prices combined with higher food prices caused by local floods would send annual consumer inflation surging to 5.3% in the June quarter and prompt the Reserve Bank of Australia (RBA) to act.
RBA Governor Philip Lowe on Wednesday said a move was plausible later in the year, though Australia had more scope to wait than some other developed nations.
Markets are still wagering on a rise as early as June and have two hikes to 0.5% priced in by August.
Markets are also betting on more aggressive tightening from the Reserve Bank of New Zealand (RBNZ) with swaps implying an 85% chance of a half-point rise to 1.5% in April.
They also see rates at 1.75% by May and 2.0% by July.
However, data out on Thursday showed a surge in Omicron cases contributed to a surprisingly steep 7.6% dive in electronic card spending in February, worth around NZ$640 million ($437.12 million).
“Omicron related nervousness is likely to remain a drag on spending for some time yet,” said Satish Ranchhod, a senior economist at Westpac.
“Spending levels will also be constrained by strong increases in the prices of necessities like food and fuel,” he added. “Those are syphoning a large amount out of households’ wallets and will squeeze discretionary spending in other areas.”
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