SYDNEY: The Australian and New Zealand dollars were flat on Friday after a seesaw week that saw them spike on a US-China tariff truce only to run into selling at major chart barriers, reinforcing recent ranges.
The Aussie steadied at $0.6405, having bounced from a $0.6358 low early in the week to as high as $0.6501 before fading away.
A break of $0.6350 or $0.6515 is needed to set a new trend in motion.
The kiwi dollar was a shade softer at $0.5866, and well short of the week’s top of $0.5969.
Major support lies at $0.5845 and a breach could see a retracement to $0.5760.
The Aussie failed to get any lasting lift from Thursday’s upbeat jobs report, in large part because markets remain confident the Reserve Bank of Australia will still cut interest rates when it meets on May 20.
Markets are 100% priced for a quarter-point cut in the 4.10% cash rate, while 42 of 43 economists in a Reuters poll expected the same. Analysts also assume the RBA will remain guarded about any future easing.
“The RBA’s communication strategy has largely erred on the side of caution, and we do not expect the Board to provide any forward guidance on the likely timing of further rate cuts,” said Gareth Aird, head of Australian economics at CBA.
“We continue to favour the RBA cutting rates at a quarterly cadence of 25bp through 2025,” he added.
“But we are cognisant of the risk that the RBA moves a little more quickly to a neutral rate around 3.35% if the trend unemployment rate steps up in a non-trivial way.”
Investors have scaled back how far rates might fall this year to 75 basis points, from more than 100 basis points a couple of weeks ago.
Australia, New Zealand dollars maintain strong gains as global economy outlook brightens
Adam Boyton, head of Australian economics at ANZ, expects cuts in May and August, but is no longer looking at an easing in July since progress in US-China tariff talks has lessened the risk of a global economic shock.
Markets also expect the Reserve Bank of New Zealand to cut its 3.5% cash rate by a quarter point when it meets on May 28.
The central bank is far ahead of the RBA, reflecting a much weaker domestic economy, having already eased by 200 basis points.
Investors suspect it might nearly be done, with rates seen bottoming at 3.0%.
American Dollar Exchange Rate