SYDNEY: The Australian and New Zealand dollars were battling to extend a rally to a fourth session on Wednesday as the US dollar gave back a little of its recent bumper gains.
The US currency’s ascent has paused as markets wait to see who President-elect Donald Trump will pick for treasury secretary, and how likely that candidate is to push ahead with Trump’s full tariff and tax proposals.
The Aussie edged up 0.2% to $0.6541, after rising 0.4% overnight and further away from the recent three-month low of $0.6443. Resistance now comes in at $0.6545 and $0.6630.
The kiwi dollar added 0.1% to $0.5920, having gained 0.3% the previous session. Support is down at the recent one-year trough of $0.5837, with resistance around $0.5969.
The Aussie continued to draw some support from a steady outlook for interest rates after minutes of the Reserve Bank of Australia’s last meeting showed it was still vigilant to upside inflation risks.
“The Bank’s language continues to screen hawkish versus both the macro data and global peers, but our expectation is for a dovish pivot in upcoming communications,” wrote analysts at JPMorgan in a note.
“We continue to forecast the first rate cut in February, though note this is a close call with the decision highly data dependent.”
Markets imply only a 37% chance of a cut to the 4.35% cash rate in February, with an April move at 58%.
Australia, NZ dollars get rare bounce, RBA in no rush to ease
A quarter-point easing is not fully priced in until May.
The next major economic data is the consumer price index for October due on Nov. 27, and another low reading is expected after a sharp fall to an annual 2.1% in September.
The trimmed mean measure of core inflation slowed to 3.2% in September and there is a chance it might hit the top of the RBA’s 2-3% band in October.
The Reserve Bank of New Zealand meets next week and investors are confident it will cut the 4.75% cash rate by 50 basis points, bringing it under the Australian rate.
Markets are also pricing in an 84% chance of another 50 basis point cut in February and see rates nearing 3.25% by the end of next year.
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