SYDNEY: The Australian and New Zealand dollars edged up on Thursday after taking heavy losses the previous day as the US currency pulled ahead on growing expectations of a possible second Donald Trump presidency, while the sell-off in bonds also steadied.
Also, a spate of strong US data and less dovish comments from some Federal Reserve officials have lessened the chance of further near-term aggressive easing after September’s outsized 50-basis-point rate cut.
The Aussie rose 0.2% to $0.6646, having fallen 0.7% overnight to as low as $0.6613.
It managed to find some support at the 200-day moving average of $0.6628.
The kiwi dollar also rebounded 0.2% to $0.6014, after declining 0.6% overnight to a fresh two-month low of $0.5993.
Next level of solid support doesn’t come into play until $0.5850, the low from August.
“With a victory for President Trump now priced into currency markets, AUD/USD has modest rather than large downside risk from when the election results start to be released,” said Joseph Capurso, head of international economics at the Commonwealth Bank of Australia.
Australia, NZ dollars pinned near multi-month lows as US yields surge
“In contrast, an unexpected win by Vice President Harris could lead to a large jump in AUD/USD of 3%-4%.”
While a number of opinion polls on the Nov. 5 US election continue to point to a closely fought race to the White House, cryptocurrency-prediction exchange Polymarket has seen a sharp increase in bets for a Trump win.
Local bonds tracked the sell-off in Treasuries earlier in the session but found their footing later.
Three-year Australian government bonds hit a three-month low of 96.02, but were last up 2 ticks at 96.08.
Also on Thursday, the Reserve Bank of New Zealand Governor Adrian Orr said that low and stable inflation is now back in sight in New Zealand, with the central bank keeping an eye on firms’ pricing intentions.
That supported the case for another outsized rate cut from the central bank in November, with swaps pricing in about 28% chance of a 75 basis point move.
A half-point move is fully priced in.
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