Antipodean Currencies Slide Amid Risk Aversion
May 20 2024 - 11:57PM
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The antipodean currencies such as the Australia and the New
Zealand dollars weakened against their major counterparts in the
Asian session on Tuesday, as Asian stock markets traded lower amid
lingering uncertainty about the outlook for interest rates, with
some U.S. Fed officials warning the central bank may still need to
raise rates if inflation persists. Traders also seemed reluctant to
make more significant bets ahead of the release of the minutes of
the latest Fed meeting.
While the likelihood interest rates will be lower by September
remains high, the chances have fallen to 76.3 percent from close to
90 percent last week, according to CME Group's FedWatch Tool.
Crude oil prices settled lower, weighed down by concerns the
Federal Reserve will likely keep interest rates higher for a longer
time. West Texas Intermediate Crude oil futures dropped to around
$79.80, down $0.26 from the previous close.
In economic news, members of the Reserve Bank of Australia's
Monetary Policy Board said that the country's economy was slowing,
and that inflation was declining less than expected, minutes from
the central bank's May 7 meeting revealed on Tuesday. A higher cash
rate may be necessary to slow the pace of disinflation, the bank
said.
At the meeting, the RBA policy board left its benchmark interest
rates unchanged, leaving the cash rate target at 4:35 percent. The
board also retained the interest rate paid on Exchange Settlement
balances at 4.25 percent.
In the Asian trading today, the Australian dollar fell to a
4-day low of 103.92 against the yen, from yesterday's closing value
of 103.34. The aussie may test support around the 102.0 region.
Against the U.S. dollar, the euro and the Canadian dollar, the
aussie dropped to 6-day lows of 0.6646, 1.6327 and 0.9067 from
yesterday's closing quotes of 0.6667, 1.6279 and 0.9089,
respectively. If the aussie extends its downtrend, it is likely to
find support around 0.65 against the greenback, 1.65 against the
euro and 0.89 against the loonie.
The aussie edged down to 1.0909 against the NZ dollar, from
Monday's closing value of 0.9089. On the downside, 1.08 is seen as
the next support level for the aussie.
The NZ dollar fell to 6-day lows of 0.6089 against the U.S.
dollar and 1.7821 against the euro, from yesterday's closing quotes
of 0.6107 and 1.7784, respectively. If the kiwi extends its
downtrend, it is likely to find support around 0.59 against the
greenback and 1.81 against the euro.
Against the yen, the kiwi edged down to 95.22 from Monday's
closing value of 95.51. The next possible downside target for the
kiwi is seen around the 91.00 region.
Looking ahead, Eurozone current account figures and foreign
trade data, both for March and U.K. industrial trends survey data
are due to be released in the European session.
In the New York session, Canada CPI data for April and U.S.
Redbook report are slated for release.
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