SYDNEY: The Australian and New Zealand dollars slid on Monday as risk sentiment turned sour after Russia’s halt of a major gas pipeline to Europe heightened concerns about global growth, while traders await the domestic rate decision this week.
The Aussie eased 0.3% to $0.6788, after sliding 1.2% during the previous week.
The currency recovered to as high as $0.6855 on Friday, helped by a mixed US jobs report that led some traders to scale back rate hike expectations for the Federal Reserve at its September policy meeting.
It now stood only a touch above its six-week low of $0.6771.
The kiwi fell 0.4% to $0.6089, also looking precariously close to its panedmic low of $0.6051.
News that Russia had indefinitely delayed the resumption of gas flows down the Nord Stream pipeline fuelled concerns about soaring energy prices and slowing global growth.
The decision to keep the pipline shut - it had been closed for maintenance - coincided with the Group of Seven finance ministers announcing a price cap on Russian oil.
On Tuesday, Australia’s central bank will raise the cash rate by another half-point to curb soaring inflation, a Reuters poll of economists found.
Analysts at Barclays expect the hike by Reserve Bank of Australia and its guidance could provide some support to the Aussie dollar, especially after it weakened sharply last week.
Australia, NZ dollars flattened by US$ steamroller, resource rout
“The AUD underperformed, falling sharply against the USD and the NZD as the combination of the relative rates move, equities and commodities sell-off weighed on the currency,” they said in a note to client.
“Hawkish guidance with a focus on arresting inflation pressures should limit AUD downside risks, even if the hike is smaller than 50bp, in our view.”
Domestic data showed on Monday that the value of stocks held by Australian private businesses in the June quarter expanded by 0.3% from the previous quarter, missing analysts’ expectations for a gain of 1.6%, and presenting some downside risk to second quarter GDP data due on Wednesday.
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