SYDNEY: The Australian and New Zealand dollars were set for weekly losses on Friday as they wobbled towards two-year lows in holiday-thinned trade, while the technical outlook remained deeply bearish.
The Aussie was idling at $0.6219, having lost 0.8% overnight to as low as $0.6216. It is headed for a weekly loss of 0.5% and hovered just above a two-year trough of $0.6199.
The kiwi dollar was struggling at $0.5623, after falling 1% overnight to as far as $0.5622. It is also down 0.5% this week to be within a striking distance of its two-year low of $0.5608 hit last week.
The two took a hit overnight as the US benchmark Treasury yields hit an eight-month high of 4.641%.
The bearish outlook for the antipodeans likely provided an excuse to sell, although moves are likely to be exaggerated given the small trading volumes.
The Aussie and kiwi have lost over 8% and 10%, respectively, this year.
Australia, NZ dollars steady but outlook still bearish
Earlier this month, the Reserve Bank of Australia opened the door to a near-term easing.
The dovish tone contrasted with the Federal Reserve’s caution on further rate cuts and weighed on the Aussie already burdened by risk aversion and worries about China’s economy.
Swaps imply a split chance that the RBA can cut interest rates by a quarter-point in February, while a first easing is more than fully priced in by April. The current cash rate of 4.35% is seen falling to 3.6% by the end of next year.
Across the Tasman sea, the Reserve Bank of New Zealand is widely expected to cut by 50 basis points when it next meets on Feb. 19.
The current 4.25% cash rate is seen reaching 3.0% by the end of next year.
In contrast, markets only expect rates in the US to reach 4% by the end of 2025.
American Dollar Exchange Rate