AGL 40.02 Increased By ▲ 0.02 (0.05%)
AIRLINK 127.35 Increased By ▲ 0.31 (0.24%)
BOP 6.62 Decreased By ▼ -0.05 (-0.75%)
CNERGY 4.50 Decreased By ▼ -0.01 (-0.22%)
DCL 8.62 Increased By ▲ 0.07 (0.82%)
DFML 41.79 Increased By ▲ 0.35 (0.84%)
DGKC 87.70 Increased By ▲ 0.85 (0.98%)
FCCL 32.68 Increased By ▲ 0.40 (1.24%)
FFBL 65.10 Increased By ▲ 0.30 (0.46%)
FFL 10.28 Increased By ▲ 0.03 (0.29%)
HUBC 109.55 Decreased By ▼ -0.02 (-0.02%)
HUMNL 14.75 Increased By ▲ 0.07 (0.48%)
KEL 5.10 Increased By ▲ 0.05 (0.99%)
KOSM 7.58 Increased By ▲ 0.12 (1.61%)
MLCF 41.41 Increased By ▲ 0.03 (0.07%)
NBP 59.70 Decreased By ▼ -0.71 (-1.18%)
OGDC 193.85 Increased By ▲ 3.75 (1.97%)
PAEL 28.36 Increased By ▲ 0.53 (1.9%)
PIBTL 7.79 Decreased By ▼ -0.04 (-0.51%)
PPL 151.75 Increased By ▲ 1.69 (1.13%)
PRL 26.40 Decreased By ▼ -0.48 (-1.79%)
PTC 16.17 Increased By ▲ 0.10 (0.62%)
SEARL 84.00 Decreased By ▼ -2.00 (-2.33%)
TELE 7.69 Decreased By ▼ -0.02 (-0.26%)
TOMCL 35.40 Decreased By ▼ -0.01 (-0.03%)
TPLP 8.12 No Change ▼ 0.00 (0%)
TREET 16.08 Decreased By ▼ -0.33 (-2.01%)
TRG 52.60 Decreased By ▼ -0.69 (-1.29%)
UNITY 26.37 Increased By ▲ 0.21 (0.8%)
WTL 1.25 Decreased By ▼ -0.01 (-0.79%)
BR100 9,953 Increased By 69.4 (0.7%)
BR30 30,908 Increased By 307.7 (1.01%)
KSE100 93,812 Increased By 456.3 (0.49%)
KSE30 29,062 Increased By 130.9 (0.45%)

SYDNEY: The Australian and New Zealand dollars started the week on the back foot after weak U.S. jobs data magnified recession fear, triggering mass risk aversion, while bonds rallied to 14-month highs on prospects of earlier interest rate cuts at home.

The currencies are also likely to be somewhat volatile ahead of a policy meeting at the Reserve Bank of Australia on Tuesday where a hold is widely expected and kiwi jobs data on Wednesday which is likely to show a sharp rise in the jobless rate.

On Monday, the Aussie slipped 0.2% to $0.6498, just a touch above a three-month low of $0.6480 hit last week. It is finding support around $0.6466 after three weeks of decline.

Against the haven yen, it fell another 0.9% to hit 94.51 yen, the lowest in eight months. A recent increase in volatility has also led to unwinding of the popular carry trade.

Market participants expect Australia’s central bank (RBA) to conclude its two-day meeting by keeping interest rates at 4.35% for a sixth consecutive meeting. The focus will therefore be on updated economic forecasts and whether a hike was considered.

Australia, NZ dollars grapple with risk aversion as US growth fears weigh

Favourable inflation data and a shift in global rate expectations have seen markets give up rate hike bets. Instead, swaps imply a 75% probability of a first cut in November.

Three-year bond futures jumped 23 ticks to 96.58, the highest since June 2023, while 10-year bond futures rose 11 ticks to 96.95, the highest this year.

“Whilst the (RBA) Board will have welcomed the latest inflation data, there is no need to deviate from the recent script. Indeed it is too early to shift tone,” said Gareth Aird, head of Australian economics at the Commonwealth Bank of Australia.

“The risk clearly sits with interest rate relief not arriving until H1 25. But we believe the data will continue to evolve in a way that sees the RBA cut the cash rate in November.”

The New Zealand dollar slipped 0.1% to $0.5952, having rebounded 1.2% last week. The local risk event this week is the jobs data where the market expectation is for a further rise to 4.7% from 4.3% in the first quarter.

“High-frequency indicators suggest that the risks are skewed to a weaker labour market than the RBNZ assumed,” said Jarrod Kerr, chief economist at Kiwibank. “If the labour market release plays to our forecasts, or even softer, then we will likely see the RBNZ double down its dovish tilt in August.”

The Reserve Bank of New Zealand (RBNZ) meets on Aug. 14 and swaps indicate a 35% chance it will cut interst rates. A first easing is fully priced in for October.

Comments

200 characters