Australia, NZ dollars steady after Beijing’s disappointing debt plan snuffs out rally

SYDNEY: The Australian and New Zealand dollars steadied on Monday after a disappointing local government debt relief package from China snuffed out a nascent rally, leaving investors back to focusing on the implications of Donald Trump’s return to the White House.

The Aussie bounced 0.1% to $0.6586, having tumbled 1.5% on Friday to finish the week 0.4% higher.

It failed to defend the 200-day moving average of $0.6630, which turned into near-term resistance. Support is at the $0.6513 low from Nov. 6.

The kiwi dollar was flat at $0.5960, after sliding 0.9% on Friday to finish the week just 0.1% higher.

Support is at $0.5912, a three-month low.

The two had a wild week as former President Trump’s election victory sent them to three-month lows before hopes about a large stimulus package from Beijing propelled them to two-week highs.

However, those hopes were dashed when authorities unveiled a 10 trillion yuan ($1.39 trillion) debt plan for local governments but provided no direct economic stimulus.

China is the biggest trading partner of Australia and New Zealand.

Not helping was data out over the weekend showed Chinese consumer prices rose at the slowest pace in four months in October, while producer price deflation deepened.

Analysts at the Commonwealth Bank of Australia expect further gains in the US dollar given it would take time for long-term investors to adjust their portfolios after Trump’s victory.

That means the Australian dollar could test $0.6490 in coming weeks, according to the analysts.

National Australia Bank analysts said on Monday they now expect the Aussie to fall to 64 cents by mid-2025, from 72 cents previously, before rising to 67 cents by end-2025, given Trump’s tariffs and looser fiscal policy would boost the US dollar.

“For pro-cyclical currencies like AUD and NZD, there are no foreseeable circumstances in which increases in tariffs are anything but negative for global growth,” the analysts said in a note to clients.

This week, Australia will release third-quarter wages data on Wednesday and monthly jobs figures on Thursday.

Wage growth is expected to slow to an annual rate of 3.6% from 4.1% in the second quarter.

Australian dollar unmoved as RBA stands pat, RBNZ sounds gloomy

The jobless rate likely ticked up a little to 4.2% in October from 4.1% in September, although the strength in the labour market has surprised many economists.

Reserve Bank of Australia Governor Michele Bullock will take part in a panel discussion with other regulators on Thursday.