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Australia, NZ dollars near multi-month lows

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The Australian and New Zealand dollars stood near multi-month lows on Friday as investors remained jittery about US President Donald Trump's trade policies.

[SYDNEY] The Australian and New Zealand dollars stood near multi-month lows on Friday as investors remained jittery about US President Donald Trump's trade policies.

The US Commerce Department launched an investigation on Wednesday to determine whether a flood of aluminum imports from China and elsewhere was compromising US national security, a step that could lead to broad import restrictions on the metal.

Commodity-led currencies, such as the Australian dollar, could be badly hit by any measures in global trade deemed protectionist.

The Australian dollar, seen as a liquid proxy for the Chinese yuan, stood at US$0.7473, after earlier falling to US$0.7440, the lowest since Jan 12.

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The Aussie is set to end the month down 2 per cent to record its worst monthly performance since December 2016.

The New Zealand dollar sank to a ten-month low overnight of US$0.6847. The currency rose slightly on Friday morning to US$0.6883, still well below Thursday's high of US$0.6920.

The currency is poised to lose 1.8 per cent in April, its third straight month of losses.

"Commodity currencies were again under pressure, coinciding with the Trump Administration's latest attack on imports - aluminium," said Imre Speizer, currency strategist at Westpac.

"The US Administration's trade protectionist policies are weighing."

Locally, attention will veer to the Reserve Bank of Australia's (RBA) monthly monetary policy meeting on May 2. The central bank is widely expected to leave the official cash rate unchanged at 1.50 per cent after easing twice last year.

The Aussie took a beating earlier this week after consumer price data reinforced expectations the RBA will stay its hand on interest rates in the near-term after easing twice last year. The RBA holds its next policy meeting on May 2.

Key measures of core inflation stayed stubbornly short of the RBA's 2-to-3 per cent target band last quarter.

Across the Tasman Sea, trade figures showing New Zealand's annual trade deficit had narrowed slightly, provided modest support to the local dollar.

New Zealand government bonds gained, sending yields one basis point lower at the long end of the curve.

Australian government bond futures rose, with the three-year bond contract up two ticks at 98.160. The 10-year contract added four ticks to 97.40.

REUTERS

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