SYDNEY: The Australian and New Zealand dollars found some support on Thursday as a rebound in world stock markets and expectations for a European rate cut helped steady risk sentiment.
The European Central Bank is considered certain to ease by 25 basis points later on Thursday with the only question being whether it leaves the door open to cuts in October and December as well.
The Aussie held at $0.6674, after bouncing overnight from the 200-day moving average at $0.6618.
Resistance is just ahead at $0.6684 and a break could open the way to $0.6767.
It also rallied on the Japanese yen to reach 95.44 from a trough of 93.57.
The kiwi dollar stood at $0.6130, having climbed from a low of $0.6107 overnight.
Resistance lies at $0.6186 and $0.6253. A slightly higher than expected 0.28% reading on core US consumer prices led markets to all but give up on an outsized rate cut from the Federal Reserve next week.
That in turn led investors to trim the chance of the Reserve Bank of Australia (RBA) easing as early as November, which is now implied at just 27%.
A cut in December is now priced at 68%, compared to more than 90% a couple of weeks ago.
Still, recent partial data on prices suggests inflation is heading lower, and only in part because of government rebates on electricity bills.
“A range of timely indicators continue to point to softer price pressures in Australia,” said Goldman Sachs economist Andrew Boak.
“We expect year-on-year growth in the monthly CPI to decelerate 80bps to +2.7%yoy in August, and the trimmed-mean measure to ease 40bps to +3.4%yoy.”
Australia, NZ dollars wary as US inflation to impact easing outlook
The latter would be below the RBA’s forecast of 3.5% for the entire December quarter and closer to its target range of 2%-3%.
The August price data are due on Sept. 25, a day after the RBA’s next meeting, but such a number would make an easing in November a little more likely.
Over in New Zealand, partial price data out on Thursday showed food rose a modest 0.2% in August, while prices for petrol, airfares and domestic accommodation all fell.
“We have revised down our forecast for September quarter inflation to 0.9%, from 1.1%,” said Satish Ranchhod, an economist at Westpac.
“Annual inflation is set to fall below 3% in the September quarter for the first time since 2021.”
The Reserve Bank of New Zealand meets on Oct. 9 and Westpac expects it to cut by another 25 basis points, while markets imply a small chance it might go half a point.
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