Australia, NZ dollars at multi-week lows, bond yields jump

[SYDNEY] The Australian and New Zealand dollars stood at multi-week lows on Thursday as the greenback strengthened after robust US jobs data cemented the chance of a Federal Reserve rate hike.

The Australian dollar held at US$0.7515, its lowest since Jan 27. After gaining in the first two months of the year, the Aussie has fallen 1.7 per cent so far in March, largely due to a resurgent US dollar.

The New Zealand dollar clocked its seventh straight day of decline to near a two-month low of US$0.6907. It is down about 4 per cent this month, compared with the US dollar's one per cent rise against a basket of global currencies.

Wednesday's ADP data showed US private payrolls grew by 298,000 jobs last month, the largest increase since December 2015. The gain was well above economists' expectations for a 190,000 increase.

The solid report made it almost certain the US Fed will hike rates at its March 14-15 meeting, and increased the likelihood of more rate rises during the year.

The antipodean currencies were also hit by falling commodity prices, including gold and oil.

For the Kiwi, weak prices for the country's top commodity - milk - at the latest dairy auction and a run of soft economic data during the week spurred its downward momentum.

"It does appear that the typical negative correlation between the US dollar and commodity prices... is reasserting," said Ray Attrill, head of FX strategy at NAB.

"This in turn means that commodity-linked currencies are flipping from outperformers on the crosses in late 2016 to underperformers now."

With a Fed hike almost fully priced in for next week, Australian government bond yields rose to their highest since late 2015. Yields on the 10-year bond were up at 2.925 per cent, well above the official cash rate of 1.50 per cent.

The three-year bond future slipped four ticks to 97.84, while the 10-year contract lost 5.5 ticks to 97.0500.

New Zealand government bonds also fell, sending yields four basis points higher.

REUTERS