Australian dollar rebounds after hitting six-week low; kiwi outperforms
THE Australian dollar rebounded on Thursday after hitting a fresh six-week low, as Federal Reserve minutes reinforced fears that US rates would be raised higher for longer, while the kiwi improved on a hawkish local rate outlook.
The Aussie edged up 0.4 per cent to US$0.6833, recouping some of the 0.7 per cent loss overnight to as low as US$0.6795. However it soon found buyers around the 200-day moving average of US$0.6803 and pulled back a little.
The kiwi was also up 0.4 per cent at US$0.6247, comfortably above its 200-day moving average of US$0.6185.
It edged up 0.1 per cent in the previous session, as a hawkish Reserve Bank of New Zealand, which delivered a half-point hike a day before, offset fears tied to the Fed rate outlook.
Recently, a run of strong economic data such as US labour, inflation, retail sales and manufacturing figures have led traders to price for interest rates staying higher for longer.
Minutes from this month’s Federal Reserve meeting - reinforcing a hawkish tone – did little to shift the concern. The Aussie has since almost wiped out January’s gain of 3.5 per cent as risk appetite diminished. “It is still looking vulnerable to the downside ... The pair needs a positive turn in risk sentiment, some patience is required,” said Rodrigo Catril, senior FX strategist at NAB.
The Aussie, in particular, underperformed against the kiwi and held at NZ$1.0941 on Thursday, after sliding 0.8 per cent overnight to a two-week low of NZ$1.0922.
Local data showed on Thursday that Australian business investment rose to a seven-year high in the December quarter, pointing to a still healthy expansion in the economy late last year despite the most aggressive tightening campaign in modern history.
Australian government bonds fell a little, with the yield on three-year bonds rising 5 basis points to 3.606 per cent, while the 10-year yields were also up 5 bps to 3.903 per cent. REUTERS
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
