The Australian dollar slipped to one-week lows on Wednesday as investors sold riskier assets and rushed towards safe havens, such as gold and government bonds, on concerns about US President Donald Trump's economic growth agenda. Investors became jittery overnight on worries about how quickly Trump could implement pro-growth policies, and unwound bullish bets on the US dollar. That hit risk sentiment globally, hurting stocks, commodities and currencies.
The Australian dollar hit a trough of $0.7651 after reaching $0.7750 in the previous session, the highest since early November. The Aussie has flirted with $0.7700/50 level several times in the past month but failed to pierce beyond, making it an indomitable barrier.
"It appears (Trump's) lack of skilled political operators will hurt the enactment of his key initiatives," said Stephen Innes, senior trader at OANDA. "The markets are very fidgety about this political setback for the Trump administration, which will be the primary driver in today's session and possibly beyond. The Aussie dollar's resilience will certainly be tested as the Trump re-inflationary narrative comes under scrutiny."
Across the Tasman Sea, the New Zealand dollar came off a three-week high of $0.7090 to fall to as low as $0.7016. It last traded at $0.7039.
The drop came in spite of strong results at an auction for dairy, the country's largest good's export earner, which sparked a brief rally in the kiwi in the early hours of the morning. New Zealand government bonds gained, sending yields 1.5 basis points lower along most of the curve. Australian government bond futures rose too, with the three-year bond contract up two ticks at 97.98. The 10-year contract climbed five ticks to 97.20.