SYDNEY: The Australian and New Zealand dollars plumbed fresh one-year lows on Thursday, undone by global risk aversion as the selloff in stocks and Treasuries continued, while cautious comments from central bank chief Michele Bullock also weighed on the Aussie.
The Australian dollar fell 0.5% to $0.6274.
It slid 0.7% overnight, reversing all of its post Q3 inflation gains that propelled it to a one-week high of 64 cents.
A critical support level of $0.6285 gave way, and near-term support is at $0.6272.
The kiwi dollar also eased 0.4% to $0.5778, a fresh low since early November last year. It fell 0.7% overnight and has support at $0.5744.
The two Antipodeans have been the whipping boys for global risk as sentiment soured.
Australia, NZ dollars get respite from pullback in Treasury yields
Treasury yields again are marching towards the critical 5% level, sending the greenback higher, and Israel preparing a ground invasion of Gaza lifted gold and oil.
“A resumption of RBA policy tightening will aid AUD’s cause, but it remains highly susceptible to hits to risk sentiment, from Middle East developments or elsewhere,” said Rodrigo Catril, senior FX strategist at National Australia Bank.
The Aussie perked up after a strong third quarter inflation report tipped the balance into a likely rate hike in November but it failed to find much support on Thursday in the appearance of Governor Bullock before lawmakers.
Bullock said the hot inflation report was in line with what policymakers had expected and they are still considering whether it would warrant a rate hike.
“She’s toning down on her hawkishness here, and that’s certainly weighing on the AUD,” said Saxo Asia Pacific Market Strategist Charu Chanana.
The three-year government yields eased to a session low of 4.275% on Bullock’s comments, after jumping to a 12-year top of 4.331% at the open.
It was last at 4.314%, up 5 basis points on the day. Yields on 10-year government paper jumped 12 basis points to 4.857%, the highest since 2011.
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