The Australian and New Zealand dollars looked set to end 2014 sharply lower on Wednesday and could remain under pressure in the new year if commodity prices remain weak. The Aussie was on track to end the year more than 8 percent lower, its second year of losses, while the kiwi looked sent for a loss of 4.8 percent.
The Australian dollar was a shade firmer at $0.8206 on the last trading day of the year, having bounced 0.6 percent on Tuesday in part thanks to a rally in iron ore, the country's top export earner. But it remained within sight of a 4-1/2-year low of $0.8087 and a break could open the way to the May 2010 trough of $0.8066. Chart resistance was found at $0.8250.
Michael McCarthy, chief market strategist at CMC Markets, sees major risks for 2015 in Europe, where structural reforms are needed. He also cited sanctions on Russia and potential problems in Greece. The Aussie found a firmer footing against the euro, which fell to A$1.4853 amid speculation the European Central Bank will start buying government bonds to avert deflation. The euro has shed more than 3 cents since mid-December and nearly 4 percent this year with key support found at A$1.4773, the 50 percent retracement of it November-December rise.
Across the Tasman sea, the New Zealand dollar hit an all-time high against the Aussie at NZ$1.0411. Investors are wagering rates in New Zealand could rise before the end of 2015 even as pressure grows for cuts in Australia. The kiwi rallied to a two-week high of $0.7849. While that was up from a 2-1/2-year low of $0.7609 hit earlier this month, it remains on track to end the year far from a July peak of $0.8839.
New Zealand government bonds were little changed during a shortened trading session. New Zealand markets will be closed on Thursday and Friday. Australian bond futures leapt to 2-1/2-year peaks. The three-year bond contract gained 3 ticks at 97.900, with the 10-year contract up 1.5 ticks to 97.235.
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