Aussie, NZ dollars set for second weekly loss on greenback strength

The Australian dollar held at US$0.7519, up 0.24 per cent, after touching a trough of US$0.7491 overnight. It was on track to fall 1 per cent for the week.
The Australian dollar held at US$0.7519, up 0.24 per cent, after touching a trough of US$0.7491 overnight. It was on track to fall 1 per cent for the week.PHOTO: BLOOMBERG

SYDNEY/WELLINGTON • The Australian and New Zealand dollars stayed near two-month lows yesterday, on track for their second straight weekly loss on broad greenback strength.

Bonds were also under pressure as expectations of a United States rate hike next week battered Treasuries.

Yields on Australian 10-year paper jumped to their highest since late 2015 at 2.98 per cent, up 24 basis points in just two weeks.

The Australian dollar held at US$0.7519, up 0.24 per cent, after touching a trough of US$0.7491 overnight. It was on track to fall 1 per cent for the week. Against the Singdollar, it was trading at 1.07.

After gaining in the first two months of this year, the Australian currency has fallen 1.8 per cent in March.

This was largely due to a resurgent US dollar.

The NZD, which fell in the past seven sessions, edged 0.25 per cent higher to US$0.6909. It was trading at 0.98 against the Singdollar. The NZD was set to post a 2 per cent loss for the week.The kiwi has had a particularly trying March, down about 4 per cent.

In comparison, the US dollar has climbed 0.8 per cent against a basket of global currencies as markets priced in a US Federal Reserve rate hike at its March 14-15 meeting.

"Since the local close yesterday, the NZD has been trading in a tight range around the US$0.69 mark... The fact that the currency has spent the last 12 hours without falling feels like a 'win'," Bank of New Zealand currency strategist Jason Wong said in a research note.

The kiwi took a hit this week after a fortnightly dairy auction showed milk prices had suffered heavy losses, raising doubts about a recovery in the country's No. 1 export. Soft sales and manufacturing data during the week caused more downward momentum.

Investors were awaiting US jobs data due later yesterday, which should reinforce expectations of a Fed hike next week.

Markets are pricing in more than a 90 per cent chance of a rate increase after a surprisingly robust private US jobs report out earlier in the week.

New Zealand government bonds eased, sending yields four basis points higher. Australian government bond futures slipped too, with the three-year bond contract down 3 ticks at 97.815. The 10-year contract was off 4.25 ticks at 96.9975.

A version of this article appeared in the print edition of The Straits Times on March 11, 2017, with the headline 'Aussie, NZ dollars set for second weekly loss on greenback strength'. Print Edition | Subscribe