Australia, NZ dollars fall as risk sentiment turns, soft jobs data weigh

SYDNEY: The Australian and New Zealand dollars were under selling pressure on Thursday as fears of a global recession bolstered the safe-haven greenback, while a softer-than-expected jobs data in Australia also weighed.

The Aussie was off 0.6% to last trade at $0.6240, having fallen 0.6% overnight as higher US yields underpinned the dollar. Support is down around $0.6200, with resistance at $0.6320.

The kiwi dollar shed 0.8% to hover at $0.5628, after sliding 0.2% overnight and edging closer to its 2-1/2 year trough of $0.5512.

Support comes in at $0.5630. Analysts at Commonwealth Bank of Australia have now lowered their forecast for the Aussie dollar, after factoring in a global recession and further weakness in the Chinese economy.

“The stronger USD and weakness in the Chinese economy will push AUD/USD below 0.6000 for period in our view,” said Joseph Capurso, a senior currency strategist at CBA.

“The unexpected spike in inflation in the major economies and consequent strong front-loading of monetary policy tightening have dampened the global economic outlook significantly.”

Official data on Thursday showed Australian employment posted 900 new jobs in September, short of market forecasts of 25,000 and well down on August’s jump of 36,300.

The miss on jobs supports the Reserve Bank of Australia’s (RBA) decision this month to slow the pace of rate hikes to quarter-point moves, having already lifted rates by 250 basis points since May.

Australia, NZ dollars catch a breather after plunge as bearish pressure builds

Markets are now expecting another rate rise of 25 basis points in November and rates are tipped to reach as high as 4.25% by the middle of next year, in part because the US Federal Reserve looks set to continue tightening policy aggressively.

Following a spike in US yields, yields on Australian 10-year bonds shot up 13 basis points to 4.077%.

The yield spread over Treasuries turned negative in the previous session and last stood at -6 bps. Yields on three-year bonds also surged 14bps to 3.658%.