💎 Fed’s first rate cut since 2020 set to trigger market. Find undervalued gems with Fair ValueSee Undervalued Stocks

Australia, NZ dollars swept lower on broad USD strength

Published 04/01/2016, 12:38 pm
Updated 04/01/2016, 12:40 pm
Australia, NZ dollars swept lower on broad USD strength
AUD/USD
-
NZD/USD
-

By Cecile Lefort

SYDNEY, Jan 4 (Reuters) - The Australian dollar kicked off the new year on a lower note on Monday in light post-holiday trade, but was hovering near six-month highs against a soggy pound.

The Australian dollar dropped to $0.7233 against a broadly firmer U.S. dollar, from $0.7285 on Thursday, pulling closer to a trough under 71 cents touched mid-December.

Traders said the move was exaggerated by a lack of liquidity with many market players still out after the holidays.

The Aussie shed nearly 11 percent in 2015 in a third year of losses on falling commodity prices, rate cuts by the Reserve Bank of Australia (RBA) and prospects of slower growth in China.

Yet, the Aussie has proved relatively resilient to a sharp fall in the prices of iron ore, the nation's top export earner.

A source of major support for the Aussie is a global yield hunt with local 2-year government bonds fetching more than 2 percent. This compares with near zero rates in Japan and even negative returns in Germany and France.

Sterling held at A$2.0326, having dropped 21 cents since June. A break under A$2.0161-68, the 61.8 percent retracement of the March-August climb, could see a move all the way to A$1.8809.

Across the Tasman sea, the New Zealand dollar NZD=D4 fell nearly 1 percent in the session to $0.6765 in light trade with financial markets there shut for a public holiday. They will re-open on Tuesday.

The kiwi lost more than 10 percent in 2015, but dairy prices showed signs of bottoming out last year and analysts reckon this could give it a leg up over the Aussie in 2016.

Australian government bond futures were mixed, with the three-year bond contract down 1 tick at 97.950. The 10-year contract added half a tick to 97.1200, while the 20-year contract was up one tick to 96.6200. (Editing by Sam Holmes)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.