SYDNEY/WELLINGTON: The Australian and New Zealand dollars were knocked lower on Friday after ratings agency Moody's cut the outlook on Australian banks to negative, providing investors an impetus to sell both currencies.
The Australian dollar dropped 0.7 percent to $0.7632, pulling away from a recent three-week peak of $0.7760. Support was found at $0.7608.
Traders said the Antipodeans were ripe for a correction and sellers surfaced on news that Moody's was considering cutting the ratings of Australia's major banks due to sluggish profit growth .
Also undermining the currency was euro buying after stops were tripped above A$1.4800. The euro sped up to A$1.4827 , having bounced four cents since a low touched last week.
The Aussie was on track for a loss of 0.7 percent for the week, having erased earlier gains made on speculation the US Federal Reserve is in no rush to raise interest rates.
Against its kiwi cousin, it shed nearly 1 percent for the week to be at NZ$1.0522
Aussie weakness also reverberated around the New Zealand dollar which came under pressure as New Zealand's banks are owned by Australian financial institutions. The Kiwi shed half a US cent to $0.7255, having touched a 14-month peak of $0.7351 last week.
It has met strong resistance around the $0.7300 level and was up 0.7 percent for the week.
"It has tried about nine times over the past eight weeks and it has failed to push further on all occasions," BNZ Currency Strategist Jason Wong said in a research note.
Data released on Friday showed New Zealand's net migration continued to rise, though this had little immediate effect on the Kiwi.
New Zealand government bonds eased, sending yields 2 basis points higher at the long end of the curve.
Australian government bond futures were quiet, with the three-year bond contract steady at 98.630. The 10-year contract edged down half a tick to 98.1150, while the 20-year contract added half a tick to 97.5900.
The spread between 10-year and 3-year government bonds widened to 52 basis points, the fattest since late June. Yields on two-year bonds edged up to 1.43 percent, having touched an all-time low of 1.42 percent on Thursday.
Comments
Comments are closed.