SYDNEY: The Australian and New Zealand dollars were in a fragile state on Tuesday, as mounting fears about a tariff-driven US recession fanned risk aversion across financial markets and put a damper on the Antipodeans’ recent rally.
The Aussie was struggling at $0.6282, having eased 0.4% overnight to as far as $0.6263. It has slipped away from the 2025 top of $0.6409 over the past few sessions, with resistance now at $0.6364.
The kiwi dollar wobbled around $0.5696, after slipping 0.2% overnight. It is now some distance away from its 2025 high of $0.5772 and battling sellers at a critical level where the 7-day, 14-day, 21-day moving averages converge.
A barrage of new policies under US President Donald Trump has increased uncertainty for businesses, consumers and investors, with back-and-forth tariff moves against major trading partners keeping markets on edge.
The two Antipodeans - often used as proxies for global risk - have been caught between opposing forces. Fears of a sharp economic slowdown in the US have hit risk assets, with a rate cut in May now seen as a coin toss, but a generally weaker US dollar on the back of lower yields has offered some breathing room for the two currencies.
“We think this is not the time to turn structurally bullish on the Antipodean currencies,” said Lenny Jin, Global FX Strategist at HSBC. “Their smaller and more nuanced ‘beta’ to the recent sharp decline in broad USD suggests the AUD and NZD are unlikely main beneficiaries of any divestment from USD assets.”
Local surveys out on Tuesday showed Australia’s consumer confidence hit a three-year high in March after the central bank cut interest rates for the first time in over four years, although the rate relief failed to excite businesses that are still grappling with tepid demand and lingering cost pressures.
Australia, New Zealand currencies edge higher as US economic fears drag dollar
Swaps imply a scant chance that the RBA will follow up with another cut in April, but a move in May is about 80% priced in.
Rates are seen reaching 3.5% by the end of the year.
In New Zealand, investors are almost fully pricing in three more rate cuts this year to a terminal rate of 3% after past aggressive rate hikes tipped the economy into a recession.
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