Australian dollar slips further, NZ$ at 2-week lows

[SYDNEY] The Australian dollar pulled further away from its recent two-year top on Thursday as investors felt jittery near stiff chart resistance levels, while its New Zealand cousin slipped to a two-week trough.

The Australian dollar was down 0.4 per cent at US$0.7935 - the lowest since July 26, and in its third straight session of losses.

It had been on an uptrend since early June, surging nearly 7 per cent to a high of US$0.8066 on July 27 on broad US dollar weakness. But the Aussie has since faltered, finding stubborn resistance around 80 US cents.

Analysts predict the currency at US$0.7800 in one month and US$0.7600 in a year's time, a Reuters poll showed.

"The recent rally in the AUD has pushed it above fundamental fair value," said Daniel Been, head of forex strategy at ANZ.

The current risk-on environment with plentiful liquidity and all-time low volatility is unlikely to stick for too long, Mr Been added.

"We do not expect that fundamentals can push it any higher and think that global risk appetite now looks extended. The AUD is due for some consolidation."

The next big event for forex traders is the US payrolls data due Friday which could affect market thinking on the pace of monetary tightening in the world's largest economy.

In contrast with the Federal Reserve, the Reserve Bank of Australia (RBA) and its New Zealand counterpart have highlighted the need for record low interest rates in their respective countries.

Across the Tasman Sea, the New Zealand dollar held near the day's low of US$0.7293, down 0.5 per cent. It slipped on Wednesday after an unexpected fall in employment suggested interest rates could remain on hold for a long time to come.

"The local market is... questioning the rationale for 2018 rate hikes following yesterday's subdued labour market data," ANZ said in a research note.

"We're still wary that the USD remains unloved though."

Investors were also cautious ahead of a central bank policy statement next week in case policymakers object to the strength of the local currency, which has seen gains of nearly 7 per cent so far this year.

New Zealand government bond prices were mostly higher, with the 10-year yield down four basis points on the day.

Australian government bond futures rose, with the three-year bond contract up two ticks at 98.060. The 10-year contract climbed 3.5 ticks to 97.330.

REUTERS