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SYDNEY: The Australian and New Zealand dollars hovered near multi-year lows on Thursday, having been shoved around by global market turmoil, but got a welcome lift from data showing Australia’s largest trade surplus on record.

The Aussie was up 0.6% at $0.6815, having again survived a test of major support in the $0.6750/6762 range which marks a two-year low hit earlier in the week.

The kiwi dollar remained under pressure at $0.6180, not far off its recent two-year low of $0.6125.

Both found support from a sell off in the euro which has been hammered by the energy crisis in Europe. The euro was down at A$1.4974, having now shed 2.2% for the week.

The Aussie also got a helping hand from date showing Australia’s trade surplus ballooned to A$16 billion in May, far exceeding forecasts of A$10.725 billion.

The lift in exports suggests trade will make a sizable contribution to economic growth in the June quarter and add to the case for more interest rate rises from the Reserve Bank of Australia (RBA), which hiked by 50 basis points (bps) to 1.35% earlier this week.

The hikes have done little for the Aussie, however, which has faced greater headwinds from nascent COVID-19 flare-ups across China, falling commodity prices and a darkening global outlook.

Analysts at the Commonwealth Bank of Australia noted that the Aussie has been whipped around wildly since the start of the Russia-Ukraine conflict in late February.

Its trading range from highs to lows has widened to 6.2%, well above the median monthly range of 4% which had held since the start of the century.

“In addition to the war in Europe, China’s economy under lockdown and growing concerns about recession in the major economies have also contributed to a pick-up in volatility,” they added.

In New Zealand, investors are looking ahead to the Reserve Bank of New Zealand’s meeting next week. Markets have already priced in a 50 bps hike, with a 90% chance of another 50 bps increase at the August meeting.

Michael Gordon, acting chief economist at Westpac New Zealand, said that the RBNZ will need to “carry through with the interest rate hikes it has signalled, or risk undoing its good work so far on bringing inflation pressures under control”.

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