The Australian and New Zealand dollars stayed near two-month lows on Friday, on track for their second straight weekly loss on broad greenback strength.
The Australian and New Zealand dollars stayed near two-month lows on Friday, on track for their second straight weekly loss on broad greenback strength. Bonds were also under pressure as expectations of a U.S. rate hike next week battered Treasuries. Yields on Australian 10-year paper jumped to their highest since late 2015 at 2.98 percent, up 24 basis points in just two weeks. The Australian dollar held at $0.7519, up 0.24 percent, after touching a trough of $0.7491 overnight. It was on track to fall 1 percent for the week. After gaining in the first two months of 2017, the Aussie has fallen 1.8 percent in March, largely due to a resurgent U.S. dollar.
The New Zealand dollar, which fell the past seven sessions, edged 0.25 percent higher to $0.6909. It was set to post a 2 percent loss for the week. The kiwi has had a particularly trying March, down about 4 percent. In comparison, the U.S. dollar has climbed 0.8 percent against a basket of global currencies as markets priced in a U.S. Federal Reserve rate hike at its March 14-15 meeting.
“Since the local close yesterday, the NZD has been trading in a tight range around the $0.69 mark… the fact that the currency has spent the last 12 hours without falling feels like a ‘win’,” Bank of New Zealand currency strategist Jason Wong said in a research note. The kiwi took a hit this week after a fortnightly dairy auction showed milk prices had suffered heavy losses, raising doubts about a recovery in the country’s No. 1 export.
Soft sales and manufacturing data during the week caused more downward momentum. Investors now await U.S. jobs data due later on Friday which should reinforce expectations of a Fed hike next week. Markets are pricing in more than a 90 percent chance of an increase after a surprisingly robust private U.S. jobs report out earlier in the week. New Zealand government bonds eased, sending yields four basis points higher. Australian government bond futures slipped too, with the three-year bond contract down 3 ticks at 97.815. The 10-year contract was off 4.25 ticks at 96.9975.