SYDNEY: The Australian and New Zealand dollars were set for the biggest two-week drop in nearly two years as a bout of global risk aversion, sustained selling against the yen and China’s lacklustre easing measures drove them sharply lower.
After falling for nine sessions to a three-month low, the Aussie steadied on Friday and was last up 0.1% at $0.6546.
It is, however, set for a weekly loss of 2%.
Coupled with last week’s drop of 1.5%, the two-week decline is the largest since September 2022. It needs to rebound above the 200-day moving average of $0.6589 to break the downward trend.
The kiwi dollar was flat at $0.5889, after sliding for a sixth day overnight to a three-month trough of $0.5873.
It fell 2% this week, adding to last week’s decline of 1.8%.
“Both the AUD and NZD look oversold from a technical perspective and if we want to be positive after trading to an overnight low of $0.6515, the AUD is showing signs of a rebound,” said Rodrigo Catril, senior FX strategist at the National Australia Bank.
The two currencies have been buffeted by a sell-off in global share markets, an unwinding of the popular carry trade using the yen as funding currency and persistently sour sentiments towards China, driving commodity prices sharply lower.
The Australian and New Zealand dollars are often used as liquid proxies for the Chinese yuan, reflecting China’s status as the biggest trading partner of two countries.
Australia, NZ dollars slump as yen, commodities conspire against them
The Aussie also steadied at 100.78 yen, having sunk another 0.6% overnight which brings losses in the past two weeks to 6%.
The kiwi also held at 90.65 yen and was down 6.2% in the last two weeks. Overnight on Wall Street, US economic strength again surprised on the upside, although that did not dent the view that the Federal Reserve will cut interest rates in September.
American Dollar Exchange Rate