SYDNEY: The Australian and New Zealand dollars eked out small gains on Monday after US President Donald Trump refused to rule out a recession from his trade policies, triggering a flight to safety into bonds, which constrained the US dollar.
The Aussie rose 0.1% to $0.6314, having finished 1.6% higher last week.
It faces resistance at around $0.6370 while support is at $0.6283.
The Kiwi dollar was up 0.2% at $0.5717, after gaining 2% last week to $0.5760. It faces resistance at the 2025 top of $0.5771, while support is at $0.5690.
The two Antipodeans - often proxies for global risk - have been caught between opposing forces.
Trump on Sunday declined to predict whether his tariffs on Canada, Mexico and China would result in a US recession, which led to a 1% tumble in Nasdaq futures on Monday, but a generally weaker US dollar on the back of lower yields has offered some breathing room for the two.
“It seems that the drop in US Treasury yields to start the week has hurt the US dollar against a wide range of currencies,” said Sean Callow, a senior analyst at ITC Markets.
“Given the president is famed for his brash claims on the economy, Trump leaving the door open to a recession this year is unsettling for the dollar.”
Still, clouding the outlook for the two is data released on Sunday showing consumer prices in China - the biggest trading partner of Australia and New Zealand - fell in February, raising doubts about its ongoing economic recovery.
In the broader market, the safe-haven Japanese yen rose 0.5% and the Swiss franc gained 0.3%.
Benchmark 10-year US Treasury yields fell 5 basis points in Asia.
US duties on steel and aluminium are expected to come into effect on Wednesday and it remains to be seen if there would be a reprieve given Trump’s fickle trade policies have already sent Wall Street into correction territory.
Australia, NZ dollars await US jobs data amid tariff confusion
Australia’s government had hoped for an exemption. There are little domestic data due this week, leaving the two Antipodeans at the mercy of developments overseas.
Australia will publish the Westpac consumer sentiment survey and business survey from the National Australia Bank on Tuesday.
In the broader market, the euro continued to climb on the massive fiscal spending plan from Germany, hovering near five-year tops on the Australian and New Zealand dollars. It last fetched A$1.718 and NZ$1.899.
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