SYDNEY: The Australian and New Zealand dollars slid to around one-week lows on Friday amid concerns of a global economic slowdown, while local bonds extended a global rally.
The Aussie was feeling unloved at $0.6686 and headed for a weekly decline of 0.8%, after tumbling 1.1% overnight to as far as $0.6689.
It also breached a key support level of the 200-day moving average of $0.6724, and is now eyeing April’s low of $0.6573.
The kiwi dollar eased 0.6% to $0.6256, having also plunged 1.1% overnight to $0.6289, a one-week trough. It was down 0.5% for the week and has support at the 21-day moving average of $0.6221.
Weighing on the two Antipodeans was a slew of data from China this week that suggest its post-COVID lockdown rebound may be petering out.
New bank loans tumbled sharply, consumer prices rose at the slowest pace in more than two years and imports unexpectedly contracted, driving a plunge in commodity prices from copper, iron ore to oil.
Overnight, data from the US showed jobless claims jumped to a 1-1/2-year high last week, while producer prices rose at smallest annual increase in more than two years, hinting at a potentially more abrupt slowing in the world’s largest economy.
“AUD/USD continues to exhibit its notorious ‘up the stairs, down the elevator’ characteristics, the latest this week following weak China inflation and credit data,” said Ray Attrill, head of FX markets at NAB.
Attrill said the Aussie can draw some support from additional tightening from the Reserve Bank of Australia given how little has been priced in by markets so far, with wage growth data next week important in helping determine the bank’s decision.
“Certainly, at least one further hike will need to be delivered as a precondition for AUD/USD lifting onto a ‘7 handle’ as early as Q3.”
Markets are betting the RBA would almost certainly keep rates steady at the next meeting in June, while seeing some chance of a hike in August.
Australian bonds climbed for the second straight session.
Australian, NZ dollars await US inflation data
Three-year Australian yields fell 9 basis points (bps) to 3.010%, the lowest in a week, while the 10-years dropped 10 bps to 3.321%.
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