📈 Fed's first cut since 2020: Time to buy the dip? See Tech-focused stock picksUnlock AI Picks

Australia dlr restrained by Fed risk, NZD has rough week

Published 06/11/2015, 01:06 pm
Updated 06/11/2015, 01:10 pm
Australia dlr restrained by Fed risk, NZD has rough week
AUD/USD
-
NZD/USD
-

By Cecile Lefort and Swati Pandey

SYDNEY/WELLINGTON, Nov 6 (Reuters) - The Australian and New Zealand dollars were hampered by broad U.S. dollar strength on Friday ahead of a key jobs report that is expected to reinforce the case for a Federal Reserve interest rate hike in December.

The Australian dollar was steady at $0.7147, having wallowed in a narrow range in the past 24 hours. It briefly climbed to a peak of $0.7224 on Wednesday, but was on track to end the week unchanged.

The Aussie was a star performer against its kiwi cousin at NZ$1.0800, having jumped 2.7 percent this week. If sustained, it would be the largest such gain in 5 years.

The kiwi NZD=D4 was undermined by growing speculation of further easing by the Reserve Bank of New Zealand in December.

It was down 2.4 percent this week against the U.S. dollar, the largest drop since early September. It was last at $0.6607, not far from a one-month low of $0.6574 touched this week.

A break under there would bring 65 cents into focus.

The Aussie's inability to stay above 72 cents was partly due to strong chart resistance at $0.7225 and sliding prices of iron ore, Australia's top export earner.

But it was rising expectations of a Fed hike in December that stole the show, outshining a fairly optimistic outlook for economic growth by the Reserve Bank of Australia (RBA).

In its quarterly policy outlook, the RBA cited prospects for an improvement in economic conditions, while it cut its inflation forecast, giving room for an easing if needed.

Earlier this week the central bank skipped a chance to cut at its November policy meeting, leading investors to lengthen the odds on a move in December.

Market pricing implies only a 20 percent chance of a cut in December while it is fully priced for one by mid-year.

The focus is firmly set on a U.S. non-farm payrolls report with forecasts of a gain of 180,000 jobs in October.

"Upbeat data flow will firm up market expectations for the Fed to commence hiking rates in December, exerting downwards pressure on the AUD," said ANZ in a note.

Aussie support was found at the double bottom of $0.7105.

New Zealand government bonds had a soft tone.

Australian government bond futures extended losses to multi-week troughs, with the three-year bond contract off 2 ticks at 98.050. The 10-year contract shed 1.5 tick to 97.1650, while the 20-year contract eased 1 tick to 96.6100. (Editing by Shri Navaratnam)

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.