Aussie, kiwi under pressure

The Australian and New Zealand dollars were under pressure on Thursday, as evidence of the damage the novel coronavirus was wreaking on the world economy soured risk sentiment, unravelling a chunk of their recent gains.

The Aussie had backtracked to $0.6289, having fallen 1.9% overnight and away from a five-week top of $0.6445. Chart support now lies in the $0.6215/45 zone. The kiwi dollar retreated to $0.5961, after shedding 1.8% overnight and leaving behind a peak of $0.6131. Support lies around $0.5920 and $0.5844.

Demand for bonds remains strong even as the government ramps up borrowing to fund massive fiscal stimulus programmes. A record A$13 billion of new 2024 paper was sold on Wednesday, drawing bids worth A$25.8 billion.

Domestic buyers bought 68% of the offer, with the rest going offshore. Banks took just over half the issue and fund managers a quarter. Foreign central banks took 5.4%.

Across the Tasman, the kiwi took an extra knock when the head of the Reserve Bank of New Zealand said it could ease policy further and even shift to negative interest rates if necessary.

The relapse came after US data showed a record drop in retail sales for March and the sharpest decline in industrial output in 70 years.