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Australia, NZ dlrs crippled by rate-cut bets, weak risk appetite

SYDNEY, Sept 24 (Reuters) - The Australian dollar was on track for a fifth straight session of losses on Thursday while its New Zealand counterpart held near a one-month low amid growing expectations of further monetary policy easing in both countries.

A stronger U.S. dollar, a wave of warnings about the U.S. economic outlook and deteriorating risk sentiment also weighed on the antipodean currencies, analysts said.

The Australian dollar fell 0.35% to $0.7048, a level not seen in two months.

“Momentum suggests the next stop will be the 100-day moving average around $0.70,” ANZ analysts said.

For the week so far, the Aussie is down 3.3%.

If losses hold, it would be the currency’s worst week since a 6% fall in mid-March, when fears of a coronavirus-driven global recession wreaked havoc in financial markets.

The Aussie’s downward trajectory began on Tuesday, when Reserve Bank of Australia (RBA) Deputy Governor Guy Debelle signalled the prospect for further easing.

That prompted some economists, including those at Westpac, Goldman Sachs and HSBC, to revise their rate call from previously predicting no change to policy at the Oct.6 meeting.

They now expect a 15 basis point cut to the cash rate and the three-year bond yield target from 25 basis points now.

While bonds rallied on the news, activity was muted on Thursday. Yields on the three-year paper were last at 0.18%, rising from an all-time low of 0.157% hit on Wednesday.

Ten-year government bonds were yielding 0.866% after going as deep as 0.855% on Wednesday.

The New Zealand dollar was last off 0.3% at $0.6532.

On Wednesday, New Zealand’s central bank hinted at further monetary easing while warning the economy may need support for a long time as the world grapples with the pandemic.

New Zealand government bonds rose, sending yields about 2-3 bps lower at the long-end of the curve.

Australian government bond futures were barely changed, with the three-year bond contract up 1 tick at 99.78. The 10-year contract eased half a tick to 99.1400. (Editing by Subhranshu Sahu)

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