The Australian and New Zealand dollars recouped losses suffered overnight Tuesday into Wednesday as the greenback came under pressure from lower US yields following the rout in the global bond market last week.
The Aussie dollar hovered around $0.6690, having recouped all of its overnight losses to $0.6624 on weak inflation data from China. It has traded in a wide range over the past two weeks, with resistance at 67 cents and support at 66 cents.
The kiwi traded at $0.6220, after hitting a low of $0.6167 overnight, and saw a slight gain of 0.05%. Resistance lies at $0.6219 and support at $0.6180.
The dollar index hit a two-month low of 101.84 on Tuesday morning against a basket of major currencies, under pressure from lower US yields after a rout in the bond market.
A survey by the New York Federal Reserve showed that short-term inflation expectations in the United States are falling, and comments from some Federal Reserve officials that the end of the rate hike cycle is near. helped alleviate fears of more aggressive tightening in the future.
Markets are now awaiting US inflation data released on Wednesday. Right now, they’ve fully priced in a July hike, with a 30% chance of another hike by November.
Westpac expects the Australian dollar to rise to 69 cents by the end of the year, from 74 cents previously.
“This reflects the fact that Australia remains a low yielding country and the global pressures that will emerge in 2023 are unlikely to make the Australian dollar a safe haven,” said Bill Evans, chief economist at Westpac.
Domestically, Australian consumer sentiment rebounded slightly in July after inflation slowed, while business conditions remained stable after a marked slowdown in the previous month.
Local bonds rebounded, with Australian three-year government bond yields falling 4 basis points to 4.196%, and ten-year bonds also falling 4 basis points to 4.235%. (Reporting by Stella Qiu, editing by Shri Navaratnam)
2023-07-11 02:22:25
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