SYDNEY: The Australian and New Zealand dollars were fast approaching major chart bulwarks on Wednesday as sustained selling against the yen and general weakness in global commodity prices sapped sentiment.
The Aussie was cowering at a five-week low of $0.6605 , having fallen another 0.4% overnight. This would be its eighth straight session of losses amounting to 2.8%. Major support now lies at $0.6576.
The kiwi dollar struck a three-month trough of $0.5938 , in what would be its fourth session of losses. Its next support levels come in at $0.5875 and $0.5853.
Both have been swamped by an unwinding of carry trades in the Japanese yen, which has seen the Aussie shed more than 6% to 102.83 yen since touching a three-decade peak of 109.67 in early July.
The yen has been lifted in part by talk of Japanese intervention and speculation the Bank of Japan might raise rates at its policy meeting next week.
Worries about Chinese demand have also undermined prices for some of Australia’s key commodity exports, with iron ore prices slumping to three-month lows under $100 a tonne.
Australia, NZ dollars extend losses as risk sours and China cuts rates
“The lack of any further support measures for China’s property sector triggered further selling,” said analysts at ANZ in a note.
“Copper has also fallen across seven consecutive sessions and is at its lowest level since early April,” they added. “Investors have been disappointed there weren’t any meaningful stimulus measures announced at the Third Plenum that would help boost demand.”
Beijing has also allowed its yuan to start depreciating again, fixing it at a two-and-a-half year low on Wednesday. Investors, in turn, are shorting the Aussie as a liquid proxy for the yuan.
The currency has drawn some support from rising bond yields, which has seen 10-year yields climb 18 basis points in the past week or so to 4.37% and widening the spread over Treasuries to 11 basis points.
The fattening of spreads looks to have whetted investor demand with a sale of new 2035 bonds upsized to A$11.5 billion ($7.60 billion), from an initial A$10 billion, after drawing bids in excess of A$56 billion.
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