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Australia, NZ dollars sag to multi-week lows on strong greenback

Friday, March 10, 2017 - 12:15

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[SYDNEY] 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 US rate hike next week battered Treasuries. Yields on Australian 10-year paper jumped to their highest since late 2015 at 2.98 per cent, up 24 basis points in just two weeks.

The Australian dollar held at US$0.7519, up 0.24 per cent, after touching a trough of US$0.7491 overnight. It was on track to fall one per cent for the week.

After gaining in the first two months of 2017, the Aussie has fallen 1.8 per cent in March, largely due to a resurgent US dollar.

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The New Zealand dollar, which fell the past seven sessions, edged 0.25 per cent higher to US$0.6909. It was set to post a 2 per cent loss for the week.

The kiwi has had a particularly trying March, down about 4 per cent.

In comparison, the US dollar has climbed 0.8 per cent against a basket of global currencies as markets priced in a US 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 US$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 US jobs data due later on Friday which should reinforce expectations of a Fed hike next week.

Markets are pricing in more than a 90 per cent chance of an increase after a surprisingly robust private US 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 three ticks at 97.815. The 10-year contract was off 4.25 ticks at 96.9975

REUTERS

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