Australia, NZ dollars nurse heavy losses as US rate cut bets crumble

SYDNEY: The Australian and New Zealand dollars nursed heavy losses on Thursday as a sharp pullback in Federal Reserve interest rate cut bets turbocharged the greenback, with their near-term fate now depending on the US jobs data due later in the day.

The Aussie was flat at $0.6482, having dropped 0.5% overnight to as low as $0.6451, the weakest level in a month.

Support lies at around $0.6440 while resistance sits around 65 cents.

New Zealand’s kiwi suffered a steeper slide to seven-month lows overnight, as widening interest rate differentials with the US worked against the Antipodean currency.

It was last up 0.1% at $0.5609, after slumping almost 1% overnight to as far as $0.5591.

Minutes from the Federal Reserve’s latest policy meeting showed on Wednesday that many policymakers were opposed to a cut in December.

Fed fund futures tumbled to imply just a 30% probability of a quarter-point reduction next month, down from 50% a day earlier.

Much is now riding on the long-delayed release of the US jobs data for September later in the day, which could still revive the chances for a Fed cut next month if it surprises on the downside.

The median forecast is for a gain of 50,000 jobs, while the unemployment rate is seen holding steady at 4.3%.

“We have a firmer view that payrolls could underperform consensus expectations, and push AUD/USD back above 0.6500,” said Joseph Capurso, head of international economics at the Commonwealth Bank of Australia.

In the broader market, stocks soared as earnings from chip titan Nvidia eased concerns about stretched AI valuations, which should help sentiment around the risk-sensitive Aussie.

For the kiwi, a still sluggish economy as well as the near certainty of a quarter-point rate cut by the Reserve Bank of New Zealand next week has seen it plumbing new lows, particularly against the Aussie, which fetched NZ$1.1556 on Thursday, not far off the weakest level for the kiwi since 2013.