SYDNEY/WELLINGTON: The Australian and New Zealand dollars were nursing losses across the board on Thursday as investors pared long positions amid uncertainties about China's economic growth and weakness in Asian stocks.
The Australian dollar fell as far as $1.0341, from $1.0392 in New York, having lost 1 percent this week. It was last at $1.0368 and looked set to test last week's trough of $1.0336. A break there would take it to levels not seen since Jan 17.
"It's more than likely it will go through that level because, since it rallied to around $1.0550 on Tuesday, the theme of China slowing down has taken hold of markets and undermined the cross rates," said a trader at a European bank in Singapore.
The New Zealand dollar was hanging by its fingertips at $0.8170 after touching an overnight low of $0.8150. It ranged $0.8153 to $0.8194 through the session.
"There seem to be quarter-end dynamics along with risk aversion, and the two combined have continued last night's sell off," said Westpac senior strategist Imre Speizer.
The Antipodean currencies have been undermined by two consecutive days of losses in Asian stocks, hurt by concerns about growth prospects in China and the United States.
That, combined with positioning ahead of the end of the month and quarter, as well as the fiscal year in Japan, added even more pain for commodity currencies.
Weaker sentiment gave speculators an excuse to increase bets the Reserve Bank of Australia (RBA) may cut interest rates to 4.00 percent next week.
As recently as last week, RBA officials were sounding content with the current rate of 4.25 percent. Yet interbank futures now imply a 36 percent chance of an easing at the bank's April 3 meeting, while swaps imply a 40 percent probability.
Australian debt futures extended recent gains ahead of major resistance. The three-year contract jumped 0.06 points to 96.470, having touched a six-week high of 96.510, the 38.2 percent of December-March decline.
The 10-year contract added 0.075 points to 95.935, an area that has become very congested since February.
Support for the Aussie is found at $1.0336, the March trough and lower edge of the 20-day Bollinger band, with resistance at seen at $1.0450.
The Australian dollar was dragged lower by Japanese investors selling for the close of their financial year on March 31. The Aussie skidded 0.4 percent on the day to 85.74 yen , from 87.58 on Tuesday, the highest this week.
The Aussie suffered against the euro, pound and Swiss franc, plumbing fresh 2012 lows.
NEW ZEALAND DOLLAR
The Kiwi's short term support is seen initially at around $0.8100 with a solid base at around $0.8060, from where it has twice rebounded this month. Resistance is seen at around $0.8210/15, ahead of strong hurdles at $0.8265.
The currency drew brief support from the National Bank of NZ's latest sentiment survey, with business optimism at a seven-month high, driven by expectations of a bounce in the building and housing sector.
A reaffirmation by dairy giant Fonterra, New Zealand's biggest export earner, that it expects to meet its forecast payout to farmers drew little fanfare.
The Aussie eased to near six-month lows against the kiwi at NZ$1.2686, in part on the talk of a possible rate cut by the RBA at next week's rate review.
New Zealand government bonds were firmer and closed well bid, which sent yields as much as seven basis points lower at the longer end of the curve.