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Australia, NZ dlrs at multi-week lows; PMIs, inflation data in focus

Published 23/04/2018, 01:33 pm
© Reuters.  Australia, NZ dlrs at multi-week lows; PMIs, inflation data in focus
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By Swati Pandey

SYDNEY, April 23 (Reuters) - The Australian and New Zealand dollars loitered around multi-week lows on Monday while bonds skidded as the greenback jerked higher amid rising inflation expectations in the United States.

The Australian dollar AUD=D4 held at $0.7676 after hitting a two-week trough of $0.7655 on Friday. The currency slipped 1.3 percent last week, its biggest weekly fall since mid-March.

The New Zealand dollar NZD=D4 stumbled to $0.7199, the weakest since April 3. It has extended its run of losses to five days now, the longest stretch since mid-November when it fell for eight sessions on the trot.

The kiwi declined 1.9 percent last week, its worst showing since mid-October.

Investors anxiously awaited surveys on global manufacturing for April due later in the day to ascertain whether the slowdown in the first quarter was temporary.

They also looked ahead to Australian consumer price data due Tuesday with March quarter core inflation seen at 1.8 percent, below the central bank's target band of 2-3 percent.

Traders say the Aussie could fall below critical chart support of $0.7650 if the inflation figures miss forecasts amid bets the Reserve Bank of Australia (RBA) will prolong its spell of stable rates.

"For the AUD, all eyes will be on consumer price data tomorrow," ANZ analysts said in a note.

"But, before that, PMIs today will be key as they'll set the stage for risk appetite. The latter continues to suggest the bias remains lower for the Aussie."

The RBA has held interest rates at a record low 1.50 percent since August 2016 and is widely expected to extend the stretch for another year.

Its New Zealand counterpart is also likely to sit pat after leaving rates at all-time lows since late 2016.

The antipodeans' stable policy outlook contrasts with the U.S. Federal Reserve which is expected to raise rates at least two more times this year.

Inflation expectations got a boost last week when oil prices CLc1 LCOc1 hit a more than 3-1/2-year peak, sending 10-year Treasury yields US10YT=RR to levels not seen since early 2014. O/R

The last time yields neared the critical 3 percent barrier in 2013 it ruptured risk appetite and sent stocks sliding.

Other major central banks are also on a tightening path. The Bank of Canada has flagged further interest rate hikes this year and the Bank of England is also expected to move rates up, albeit slowly.

New Zealand government bonds 0#NZTSY= eased, sending yields about 3.5 basis points higher at the long end of the curve.

The Australian three-year bond futures contract YTTc1 hit its lowest since late 2015. It was last down 4 ticks at 97.690. The 10-year contract YTCc1 slipped 6 ticks to a two-month trough of 97.120. (Editing by Jacqueline Wong)

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