The Australian and New Zealand dollars were bruised on Thursday after a hawkish sounding Federal Reserve revived speculation of a rate hike this year, boosting the US dollar. There was plenty of action on the kiwi front which last stood at $0.6684, nearly a cent lower from the start of Wednesday's session. Support was found around $0.6640.
It rebounded from a two-week trough of $0.6622 as some short positions were squeezed in the wake of a Reserve Bank of New Zealand policy (RBNZ) review. As expected, the RBNZ kept interest rates steady at 2.75 percent following three rate cuts, but voiced concern about the rising New Zealand dollar. Traders noted the central bank made no fresh attempt to talk down the currency and also gave no strong hint of an imminent rate cut, two factors that kiwi bears were counting on.
The Antipodean currencies had skidded overnight after the Fed kept alive expectations that it might still raise interest rates by year-end. The Australian dollar struggled near three-week lows at $0.7098, having dropped 1 percent on Wednesday. It has shed more than 2 cents this week, an outcome that will please the Reserve Bank of Australia (RBA). Australian government bond futures were mixed, with the three-year bond contract down 1 tick to 98.240. The 10-year contract added half a tick to 97.4000, while the 20-year contract eased 3 ticks to 96.8150. New Zealand government bonds eased, with yields 1.5 to 2 basis points higher along the curve.
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