SYDNEY: The Australian and New Zealand dollars on Friday were headed for a second straight week of losses against a resurgent US dollar, pressured in part by a sudden slide in the Chinese yuan.
Both held gains on a beleaguered yen, while the Aussie hit a four-month high against its kiwi cousin as the interest rate outlooks in Australia and New Zealand diverged.
The Aussie fell 0.6% to $0.6527, tracking a sizeable drop in the Chinese yuan, which was pressured by the expectation of imminent policy easing. It slipped 0.3% overnight, failing to sustain a rally from an unexpectedly strong local jobs report as the US dollar gained broadly on low jobless claims.
In a week packed with central bank meetings, the Australian dollar was weighed down by the Reserve Bank of Australia’s (RBA) decision to drop its tightening bias. But it hit a fresh nine-year high on the yen and an eight-month top on the Swiss franc as Switzerland unexpectedly cut interest rates.
The Aussie is set for a weekly drop of 0.4%, thanks to the yuan-triggered fall on Friday. The currency is often sold as a liquid proxy for the Chinese currency, reflecting Beijing’s position as the largest buyer of Australian resources.
The kiwi fell 0.5% to $0.6013, a four-month low, and is set for a weekly loss of 1.2%. Weighing on the currency is unexpected weakness in the New Zealand economy, which reinforced market expectations of about three rate cuts this year.
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