SYDNEY: The Australian and New Zealand dollars were pinned near multi-month lows on Friday as rising Treasury yields lifted their US counterpart, while the promise of more Chinese stimulus offered only a sliver of support.
They drew some comfort from an outsized rate cut in Switzerland that saw the Aussie jump 1.3% on the Swiss franc , while an easing from the European Central Bank helped it firm on the euro.
It also held a 1.3% weekly gain on the yen to 97.14 as markets widened the odds on a possible rate hike from the Bank of Japan next week.
The Aussie had no such luck on the US dollar as investors have scaled back expectations for rate cuts in 2025, even as they almost fully price in an easing for next week.
Futures imply US rates will end 2025 around 3.80%, compared to 3.64% for Australian rates. Likewise, Treasury yields have jumped sharply in recent days, pushing the dollar up across the board.
This left the Aussie down 0.3% for the week at $0.6367, and not far from a 13-month low of $0.6337.
The next bear target is $0.6271, with resistance at $0.6430.
Australian dollar struggles, bonds trim gains as jobs report looms
The kiwi dollar was near a two-year trough at $0.5768 , having shed 1% for the week so far. It now risks a retreat to the 2022 low of $0.5512.
The Aussie had gained only fleeting support from Thursday’s data showing a surprise drop in unemployment in November. That led markets to trim the probability of a rate cut in February to around 50%, from 68%.
Three-year bond futures were down at 96.136, having been as high as 96.304 on Wednesday.
The Reserve Bank of Australia had seemingly opened the door to an earlier easing at its policy meeting this week, but emphasised that it depended on the flow of data.
“We concede that our confidence in a February cut has been shaken,” said Nomura economist Andrew Ticehurst.
“But consumer spending and wage growth have been weaker than it expected, and the latest monthly survey data regarding price pressures have been encouraging.”
“It is quite possible that low inflation will still allow a lower cash rate, even if the unemployment rate does not suggest that the economy requires one.”
The Reserve Bank of New Zealand is already well into its easing cycle and markets imply a 66% chance it will cut by another 50 basis points at its next meeting in February.
Rates are seen ending 2025 around 3.10%.
American Dollar Exchange Rate