The Australian dollar fell again on Thursday and its New Zealand cousin was on track for a fifth straight day of weakening as the greenback extended gains amid bolstered expectations of at least three rate hikes in the United States this year. The Aussie slipped to $0.7792, inching closer to a 1-1/2 week trough of $0.7759 earlier this month. Technical analysts see strong chart support around $0.7760.
The currency is down more than 3 percent this month after strong gains in December and January. The New Zealand dollar eased to a one-week low of $0.7307. It was last flat at $0.7312. The antipodean currencies have had a golden run since late 2017, largely on the back of solid investor appetite for risky assets and as the greenback stumbled to multi-year lows.
But the prospect of a more aggressive US Federal Reserve has helped reverse the dollar's slide. Important to market expectations was minutes of the Fed's last policy meeting, released on Wednesday, which highlighted hopes of faster economic growth due to fiscal stimulus. The futures market implies around a 40 percent chance of a rate rise by August and is not fully priced for a move of 25 basis points to 1.75 percent until early next year.
The policy outlook is similar in New Zealand, where the central bank has indicated a first move might not come until mid-2019. New Zealand government bonds eased, sending yields 2.5 basis points higher at the long end of the curve. Australian government bond futures were mixed, with the three-year bond contract up 1 tick at 97.865. The 10-year contract fell 1.5 ticks to 97.1300.
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