SYDNEY: The Australian and New Zealand dollars were idling on Tuesday, as the greenback loomed large ahead of the release of US inflation data later in the week, capping gains spurred by hopes of a market rescue package from Beijing.
The Aussie was hovering at $0.6575, after erasing most of its overnight gains and falling below the 200-day moving average of $0.6579 in a bearish signal for the currency.
It had climbed to a high of $0.6612 after Bloomberg reported Beijing was seeking to mobilize about 2 trillion yuan ($278 billion) to stabilise the country’s slumping stock markets. The kiwi was changing hands at $0.6096, having also gained 0.4% overnight to as far as $0.6116.
The 200-day moving average of $0.6088 remained support for now.
Coming into the new year, the US dollar has been resilient as traders pushed back the expected timing of the first rate cuts from the Federal Reserve.
The dollar index hit a six-week high overnight and is up 2.1% against its major peers, helped by a renewed climb in yields ahead of US GDP and inflation data.
New Zealand’s fourth-quarter inflation report on Wednesday delivered few surprises.
Australia, NZ dollars stem downturn but rate jitters persist
The consumer price index (CPI) rose 0.5% from the September quarter, in line with expectations while the annual rate slowed to 4.7%, the lowest since mid 2021.
“Inflation came in bang in line with our expectations… But deep down we were hoping for a downside surprise,” said Jarrod Kerr, chief economist at Kiwibank. “Inflation is running well below the RBNZ’s forecasts. But we are still a ways away from our central bank pivoting.”
The two-year swap rate jumped 7 basis points to 4.7980%, the highest in two weeks.
In Australia, Prime Minister Anthony Albanese said he would consult lawmakers to modify proposed tax cuts for higher earners, potentially breaking an election pledge in a decision likely to face strong resistance from the opposition.
The Australian Financial Review reported the modifications would be budget and inflation neutral.
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