SYDNEY: The Australian and New Zealand dollars slipped on Thursday after Federal Reserve minutes showed “some participants” could have supported a hike in June, but traders were looking ahead to the U.S. non-farm payrolls report for next big price movement.
The Aussie was hanging at $0.6652, having slipped 0.5% overnight to as much as $0.6654 and edging closer to a three-week trough of $0.6595. It faces resistance at the 200-day moving average of $0.6697.
The kiwi dollar was hovering at $0.6174, after easing 0.2% to as low as $0.6178. Resistance is around $0.6212, while support is at $0.6172.
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Minutes released on Wednesday showed that a united Fed agreed to hold interest rates steady at the June meeting, but the vast bulk of participants expected it would eventually need to tighten policy further.
Moreover, “some” wanted to move ahead with a rate hike in June, with Goldman Sachs estimating about seven or eight participants favoured a rise.
“The Fed minutes, out early this morning revealed the unanimous decision to skip (a hike at) the June meeting was not a consensus view,” said Rodrigo Catril, senior FX strategist at National Australia Bank.
“In the end it seems that the hawks were persuaded to toe the line in exchange for the prospects of further tightening later in the year. After all, based on the new June dot plot, a majority has a bias for a higher Fed funds rate by year end.”
The U.S. non-farm payrolls report is due on Friday.
The prospects of rates staying higher for longer triggered a jump in Treasury yields, with the two-year yields rising 6 basis points overnight to 4.9510% and the benchmark 10-year yields up 8 basis points to 3.9434%, the highest since early March.
Australian yields rose in tandem. Three-year government bond yields rose 10 basis points to 4.108%, a fresh high since 2011, while 10-year yields were up by a similar margin also to 4.108%.
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