The Australian and New Zealand dollars stepped back on Friday as risk appetite soured after US President Donald Trump scrapped a key summit with North Korea, although Pyongyang's measured response to the cancellation helped calm nerves. The Australian dollar, widely seen as a liquid proxy for risk trades, was last down 0.2 percent at $0.7563 as it drifted away from a recent one-month top of $0.7606.
The Aussie is still up 0.7 percent for the week so far. The New Zealand dollar eased 0.1 percent to $0.6923 from a one-week high of $0.6974 set on Tuesday. For the week, the kiwi is almost flat after five consecutive weekly losses. The Aussie and kiwi got a small lift this week as the greenback faltered after minutes of the US Federal Reserve's last meeting were seen as dovish.
The antipodean currencies have been under pressure from diverging monetary policies with the central banks in Australia and New Zealand taking a consistent stance that rates will remain at record lows even while the US Federal Reserve has been on a tightening path. Australian government bond futures gained, with the three-year bond contract adding 1.5 ticks to 97.80. The 10-year contract rose 2 ticks to 97.2050.
"For the moment, the dominant themes in developed market forex is the mild dovish tilt, or at least the perception of same, of the FOMC and the market's reaction to the cancellation of the US-North Korea summit," said Greg Mckenna, Sydney-based chief strategist at AxiTrader. On Thursday, Trump wrote a letter to North Korean leader Kim Jong Un to announce his withdrawal from what would have been the first-ever meeting between a serving US president and a North Korean leader in Singapore on June 12.
Comments
Comments are closed.