Australian, New Zealand dollar slip from highs

London

THE Australian and New Zealand dollars slipped from highs hit overnight, and the US dollar fell versus the yen on Thursday, in what analysts said was profit-taking following a strong rally.

The US dollar index was flat on the day at 1051 GMT, at 93.669.

Versus the Japanese yen, the US dollar was down 0.3 per cent at 114, having slipped from 114.695 the pair reached on Wednesday (Oct 20), which was the yen's weakest in four years.

The yen, which had been weakening against major peers since late September, also reversed its recent losses versus the Australian dollar on Thursday (Oct 21). The Australian dollar hit its strongest versus the yen since 2018 overnight, before retreating.

There was no clear trigger for the reversal, but Jeremy Stretch, head of G10 FX strategy at CIBC, said that weakness in Asian equities and a pullback in risk appetite may have played a role.

"We've seen a significant run in some of the yen crosses, Aussie-yen being an obvious catalyst, and so we're just seeing a little bit of a consolidation as risk has been under a little bit of pressure overnight," he said.

Asian stocks slipped on Thursday as the upbeat mood that carried the Dow Jones and bitcoin to record highs a day earlier ran out of steam, replaced by fresh worries about the weakening Chinese property sector as a possible default by China Evergrande Group looms within days.

European shares opened lower and US stock index futures pointed to a weaker open for Wall Street.

CIBC's Stretch said he expects the pullback to be temporary, and for the Australian and New Zealand dollars to continue gaining.

At 1058 GMT, the Australian dollar was down 0.4 per cent against the US dollar at US$0.7489, compared to the US$0.75465 it reached overnight.

The New Zealand dollar was also down 0.3 per cent.

Britain's pound was down just 0.1 per cent against the US dollar, at US$1.3803, supported by expectations that the Bank of England will raise rates. The euro was down 0.1 per cent at US$1.16405, still close to Tuesday's (Oct 19) three-week peak of US$1.1670.

In cryptocurrencies, bitcoin was down around 0.6 per cent at US$65,609 . On Wednesday it hit a new all-time high of US$67,016.50.

Market players say the latest wave of buying has been supported by the launch of the first US bitcoin futures-based exchange-traded fund (ETF) with investors betting this will open a path to greater investment from both retail and institutional investors. REUTERS