SYDNEY: The Australian and New Zealand dollars fell on Monday as the assassination attempt on former US President Donald Trump boosted his re-election odds, lifting the greenback, while the soft Chinese data failed to provide any support.
The Aussie slipped 0.1% to $0.6772, having climbed 0.5% last week to a six-month top of $0.6798 thanks to favourable yield differentials.
Support lies around $0.6714, with resistance up at a high from last December at $0.6871.
The kiwi dollar fell 0.3% to $0.6098, after falling 0.4% last week to as low as $0.6065.
It has been trending lower since New Zealand’s central bank wrongfooted markets and opened the door to easing last Wednesday.
The initial reaction to the deadly shooting at the Trump rally has been to buy US dollars and bitcoin, while selling long-term US Treasuries.
Those trades could gain in popularity ahead of the US election in November.
Not helping the Antipodean currencies is soft China economic data showing the world’s second-largest economy grew 4.7% in the second quarter, missing analysts’ forecasts of 5.1%.
However, it did underscore the need for more stimulus from Beijing as a once-in-five-year gathering of top officials gets underway.
New Zealand dollar falls, bonds rally as RBNZ flags possible easing
“Expectations are low for the meeting to lead to ground breaking policy initiatives and materially lift confidence about the Chinese economy,” said Carol Kong, a currency strategist at the Commonwealth Bank of Australia.
“That said, markets will closely watch if the government signals more demand side policies, for example to stimulate consumer spending or infrastructure spending which may give a boost to CNH, AUD and NZD.”
Down Under, investors are awaiting New Zealand’s CPI report on Wednesday as well as Australian jobs data on Thursday, with both viewed as critical for the immediate interest rate outlook.
Economists expect New Zealand consumer inflation slowed to 3.5% in the second quarter, the lowest in three years, from the first quarter’s 4.0%, adding to the case for interest rates to be lowered as early as in August.
A further climb in Australia’s current jobless rate of 4.0% would argue against a rate hike from the Reserve Bank of Australia (RBA) next month, although much would depend on the second-quarter inflation report due at the end of July.
Markets see a 15% chance that the RBA could deliver a rate hike in August, with the first rate cut not fully priced in until August next year.
The Australian dollar fetched NZ$1.1106, nearing a 20-month top.
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