SYDNEY: The Australian and New Zealand dollars floundered near three-month lows on Thursday as their US counterpart extended its bullish run, while local jobs data were too mixed to provide fresh impetus.
The Aussie held at $0.6484, having sunk 0.7% overnight to carve out a trough of $0.6480.
The breaks of support at $0.6513 and $0.6489 reinforced the bearish trend and sets up tests of $0.6440 and $0.6349.
The kiwi dollar flatlined at $0.5878, after touching a 14-week low of $0.5876 overnight.
Support lies at the August low of $0.5849, where a break would take it to ground last visited in November 2023.
This weakness has mostly been a reflection of broad US dollar strength, such that against a basket of currencies including the euro and yen the Aussie is well above its August lows and still roughly in the middle of this year’s trading range.
Data released on Thursday showed employment in Australia rose by 15,900 in October, to slightly miss market forecasts of a 25,000 increase and break a four-month streak of outsized gains.
Yet, unemployment stayed at an historically low 4.1%, where it has been since April as strength in hiring was matched by a sharp rise in the workforce.
Investors assumed the report was far from weak enough to change the Reserve Bank of Australia’s steady policy outlook, which was reaffirmed by the head of the central bank earlier in the day.
As a result, swaps still show just a one-in-10 chance the RBA will cut the 4.35% cash rate at its next meeting on Dec. 10, and only a 29% probability of a move in February.
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“With the economy continuing to run above full employment levels, there is a strong case for the RBA to retain its cautious approach to policy setting,” said Abhijit Surya, an economist at Capital Economics.
“Accordingly, risks are tilted towards the Bank cutting rates later than Q1 next year, as we are currently forecasting.”
In New Zealand, figures on prices released on Thursday were subdued overall, with food in particular falling 0.9% in October, supporting the Reserve Bank of New Zealand’s confidence that inflation is under control.
“We’re currently forecasting a 0.4% rise in consumer prices in the December quarter, and today’s results suggests some downside risk to that forecast,” said Satish Ranchhod, a senior economist at Westpac.
The RBNZ itself had forecast a 0.5% rise in Q3 consumer prices.
“We expect the RBNZ’s upcoming policy statement on 27 November will incorporate a lower near term inflation outlook and that it will deliver a 50bp cut in rates.”
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