SYDNEY: The Australian and New Zealand dollars extended their losing streak on Thursday as a bout of selling in markets in the new year and a slight pushback against US rate cut expectations underpinned the greenback.
The Aussie was sagging at $0.6722, having dropped 0.4% overnight to as far as $0.6703, a two-week trough.
The currency is down for the fifth straight day, with resistance around the 10-day moving average of $0.6795.
The kiwi dollar was languishing at $0.6240, also the lowest level in two weeks, after a 0.1% decline overnight. It is down 1.2% this year, with resistance lying around $0.6296.
Overnight, minutes of the December Federal Reserve meeting showed officials were convinced inflation was coming under control and were concerned about the damage that “overly restrictive” monetary policy might do to the economy.
However, there was no clear-cut clues on when the Fed could begin easing rates, with policymakers still seeing a need for rates to stay restrictive for some time.
Futures pared back the chance for the first cut in March to 72.7%, compared with 79% a day earlier, according to the CME FedWatch tool.
However, the adjustment is marginal and markets still see about 145 basis points of easing priced by the end of the year. Analysts at Morgan Stanley said they do not believe the Fed would start lowering rates as soon as March.
Australia, NZ dollars pinned near two-week lows as global risk rally stalls
“We think it will take until June for a data-dependent Fed to have clear and convincing evidence inflation will return to the 2% target, and therefore begin cutting rates,” they said in a note to clients.
In the meantime, data released so far in the new year suggest the US labour market has continued to cool, with job openings falling for the third straight month.
The all-important non-farm payrolls report is due on Friday. Down Under, the economic calendar is empty until next week with the release of retail sales and monthly inflation report for November.
The Reserve Bank of Australia will meet on Feb. 6, with the market overwhelmingly betting on an extended pause in policy.