SYDNEY: The Australian and New Zealand dollars fought for a footing on Wednesday, as a robust US job openings report bolstered the US dollar, fuelling bets that the Federal Reserve might have to be more aggressive in taming decades-high inflation.
The Aussie edged up 0.2% to $0.6871 but is headed for a monthly loss of 1.7%, pinned down by recession fears and lower commodity prices.
It fell 0.7% overnight and now has support at $0.6841, a six-week low.
The Kiwi also rose 0.2%, to $0.6139, having also skidded 0.4% overnight. It is set to have slid 2.4% for the month.
Better-than-expected China manufacturing PMI figures offered some relief to the Aussie and Kiwi, which were battered by strong US job openings data overnight.
Plunging commodity prices also soured sentiment, with oil falling nearly $6 a barrel and iron ore tumbling below $100. The next big test for the Antipodeans is US non-farm payrolls data due on Friday.
Markets may not like a strong number if it supports the basis for continuation of aggressive rate hikes, which could further boost the US dollar.
Yields on Australian government bond futures slid on Wednesday.
Australia, NZ dollar helped off lows by yen selling
The three-year yield edged 4 basis points lower to 3.328%, while the 10-year yield dropped to 3.618% from the previous close of 3.638%. The value of construction work done in Australia in the June quarter fell by 3.8%, missing analysts’ expectations for a gain of 0.9%, data from the Australian Bureau of Statistics showed.
“On face value, today’s data presents c.50bp downside to our Q2 GDP tracking estimate (at 1.7% quarter-on-quarter), although we are wary of the unusual volatility in the construction data given weather-related disruptions,” said analysts at Goldman Sachs in a note to clients.
Markets are wagering that the Reserve Bank of Australia will lift interest rates by another 50 basis points at its next policy meeting, on Sept. 6, and that rates will peak around 3.85% in April or May next year.
Comments
Comments are closed.