The Australian dollar was pinned near two-month lows on Thursday as the greenback surged on bets inflation and interest rates will rise in the United States under President-elect Donald Trump.
The Australian dollar was at $0.7478, after skidding as far as $0.7461 overnight, its lowest since Sept. 15. The Aussie was now threatening a key chart support, and a break would take it to territory not visited since June.
The Aussie has lost more than 3.5 percent since Trump’s victory on Nov. 8 raised the spectre of faster U.S. inflation and, perhaps, more rate hikes by the Federal Reserve.
Australian jobs data issued on Thursday did little to boost confidence at home, with employment rising by less than expected and heavily weighted towards part-time work. Data on Wednesday showed wages growth at a record low.
For the Aussie, “closing beneath 75 U.S. cents was a notable victory for bears who are now eyeing a run towards $0.7439,” said Matt Simpson, senior analyst at ThinkMarkets in Melbourne.
“The employment and wage growth data do not point to an inflation recovery in Australia,” he said. “The Aussie move is likely down to Trump’s policies and the Fed’s December statement, both of which could easily put the AUD on the back foot.”
The Aussie had a bit of an upswing early in November, largely due to a sharp rebound in the prices of iron ore and coal – two of its largest exports. However, traders are worried the iron ore rally lacks legs.
Dalian iron ore futures have lost more than 10 percent of their value in just three days, after rising 21 percent in October. They fell as much as 3.3 percent on Thursday.
The Aussie did stay near multi-month peaks against the yen and the euro, thanks to carry trades where investors borrow in safer assets to buy riskier, high-yielding currencies.
The New Zealand dollar bounced after six straight sessions of losses. It was last up 0.4 percent at $0.7095, not too far from a one-month trough hit on Wednesday.
In contrast to its trans-Tasman cousin, New Zealand is enjoying stronger employment growth. Data on Thursday showed job ads rose nearly 18 percent in October from a year ago.
New Zealand government bonds ticked higher, sending yields up about 1 basis point lower at the longer end of the curve.
Australian government bond futures rose too, with the three-year bond contract up 3 ticks at 98.22. The 10-year contract climbed 6 ticks to 97.45.