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Australian dollar nears 6-year low against US dollar
[SYDNEY] The Australian dollar stayed under a cloud near six-year lows against the US dollar and pound on Monday, with investors increasing their bearish positions, while the New Zealand dollar paused above recent lows.
The Australian dollar was depressed at $0.7286, not far from $0.7260 set last week and the weakest level since 2009.
Support was found at $0.7250 and $0.7200 where traders cited buy orders. The Aussie has skidded 5.5 per cent so far this month, which if sustained would be the largest monthly fall since October.
It remained under pressure on concerns about China and falling commodity prices.
The market often uses the Aussie as a proxy for Chinese growth because of the countries' strong trade links. It is also one reason the local dollar fell against the euro and sterling.
The euro inched up to the highest this year at A$1.5198 to be last at A$1.5042. It has jumped a massive 15 cents since late April as investors repositioned their portfolios. Resistance is seen at A$1.5331, the December 2014 peak.
Sterling was another stellar performer at A$2.1289, having climbed to its highest in six years. "Sell the Aussie is an easy theme and you don't really need much to trigger it," said Annette Beacher, chief Asia-Pacific macro strategist at TD Securities in Singapore. "The only thing supporting the Aussie is we don't expect the Fed (U.S. Federal Reserve) to undergo a severe tightening cycle," she said, seeing the Aussie pulling back to 75 cents by the end of the year.
The New Zealand dollar inched up to around $0.6600, from $0.6578 on Friday, but was still feeling the effects of weak factory Chinese data and sliding commodity prices. "Attention has returned to fundamentals where the outlook for New Zealand's primary commodity export, dairy, still looks fairly dire," said BNZ senior strategist Kimberly Martin in a note.
Near-term kiwi support is seen at $0.6540 and the year-to-date low just under $0.6500, with resistance emerging around $0.6620.
A further 25 basis points cut to 2.75 per cent in September is considered a virtual certainty. The majority of analysts expected the cash rate to hit 2.5 per cent by the end of the year where it will stay through 2016.
New Zealand government bond yields were as much as 3 basis points lower with 10-year yields at 3.335 percent, the lowest since April.
Australian government bond futures rose, with the three-year bond contract up 3 ticks at 98.130. The 10-year contract gained 5.5 ticks to 97.2050.