Australia, New Zealand currencies set for weekly loss as dollar makes comeback
SYDNEY: The Australian and New Zealand dollars are set for a weekly loss on Friday as a hawkish outlook on U.S interest rates lifted the battered greenback, though the direction of travel will now rest on progress in looming Sino-US trade talks at the weekend.
The Aussie slipped 0.2% to $0.6387 having fallen 0.4% overnight away from a five-month peak of $0.6515 hit on Wednesday.
It is set for a weekly loss of 0.9% to end four weeks of gain, with resistance now at the 200-day moving average of $0.6457.
The kiwi dollar eased 0.3% to $0.5886 after losing 0.6% overnight, falling further from a six-month top of $0.6029 hit in late April.
In a bearish sign, it broke the bottom of a recent trading range at $0.5894 but still has support at the 200-day moving average of $0.5882.
The US dollar received much-needed support after the Federal Reserve held rates steady and signalled it was in no rush to ease.
Overnight, futures scaled back the degree of expected policy easing this year to 68 basis points from 78 bps a day earlier.
A US-U.K. trade deal has raised hope of progress in Sino-US talks in Switzerland on Saturday, giving the greenback breathing room amid chaos brought about by changing US trade action.
US President Donald Trump has said tariffs on Chinese goods will come down from 145%.
Australia, NZ dollars bounce on hopes for progress in US tariff stalemate
'The USD is likely to recover in the short-term as investors re-evaluate the change in tone on trade and the likelihood of market-friendly deals,' said Chang Wei Liang, a foreign exchange and credit strategist at DBS Bank.
'Though it is unclear whether his 'deals' could lead to a meaningful reduction in tariffs.' Despite the pull-back in Fed easing expectations, investors still assume the Reserve Bank of Australia will cut its cash rate by 25 basis points to 3.85% when it meets on May 20 given a slowdown in inflation and softness in consumer spending.
Across the Tasman Sea, markets are still wagering heavily on a rate cut from the Reserve Bank of New Zealand this month to 3.25%.
Swaps imply continued easing to a terminal rate of 2.75%. Westpac Banking on Friday pencilled in an extra RBNZ cut in July to 3%, citing downside risk to the economy from the United States' trade war and associated uncertainty.
'We don't think the RBNZ will be able to see its way through the fog of war by July or even August. Hence, it's likely they will continue to cut the OCR,' said Kelly Eckhold, chief economist at Westpac New Zealand.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
2 hours ago
- Business Recorder
Trump commends ‘very strong' Pakistan leadership
WASHINGTON: US President Donald Trump has once again projected his role in de-escalating the recent Pakistan-India conflict while commending the 'very strong' leadership in Islamabad. Speaking at a White House event alongside German Chancellor Friedrich Merz, President Trump recounted how Pakistan-India tensions were 'getting close to being out of hand,' and said he intervened by speaking directly to leaders on both sides. Trump again said he felt proud of brokering a ceasefire between Pakistan and India. He said that he told both countries that if bullets are fired, there will be no trade, adding Pakistan has very strong leadership.
Express Tribune
4 hours ago
- Express Tribune
Circle's blockbuster IPO paves way for more listings
Listen to article Stablecoin issuer Circle's $1.05 billion initial public offering on Thursday could spur other large crypto players to follow suit as the industry benefits from US President Donald Trump's embrace of the sector, according to experts and analysts. Circle priced its shares at $31 on Wednesday. In a sign of investor demand, they opened on the New York Stock Exchange on Thursday at $69 apiece and closed at $83.23. That trajectory is likely to encourage other crypto companies eyeing stock market debuts. Circle is the first major crypto company to go public since crypto exchange Coinbase listed on Nasdaq in 2021. Analysts have pointed to crypto exchanges Kraken and Gemini as other potential IPO candidates in the digital asset sector. Neither company immediately responded to a request for comment. "It would not be surprising if other crypto companies follow suit," said Jacob Zuller, an analyst at Third Bridge. "Public markets have accepted that crypto is not going away." Circle issues stablecoin USDC, a cryptocurrency pegged to the US dollar and designed to maintain a constant value. Crypto traders use stablecoins to move funds between tokens and proponents say they could be used to send and receive payments instantly. "We've had a deep conviction from the inception of the company that we could build a new infrastructure for money, built on the internet, that could radically reshape the utility of money," Circle CEO Jeremy Allaire said in an interview with Reuters. Circle's IPO success demonstrates that there is pent-up demand in the public markets for crypto and other financial technology companies, said Dan Dolev, senior analyst at Mizuho. "If IPOs go wild, it's a good bellwether," he said. NYSE Group President Lynn Martin went a step further, calling Circle's IPO a positive sign not just for crypto listings, but for IPOs in general. "I see the Circle IPO as a bellwether for the IPO markets this year, not just for crypto listings," she said. Fintech companies have been warmly received in recent months. Shares in retail brokerage eToro surged 34% in their Nasdaq debut in May. Digital banking startup Chime is seeking a more than $11 billion valuation when it launches next week.
Express Tribune
4 hours ago
- Express Tribune
Oil climbs over $1 onUS-China talks
Listen to article Brent crude rose more than $1 a barrel on Friday morning and oil prices were on track for their first weekly gain in three weeks after US President Donald Trump and Chinese leader Xi Jinping resumed trade talks, raising hopes for growth and stronger demand in the world's two largest economies. Brent crude futures gained $1.50, or 1.61%, to $66.39 a barrel by 1349 GMT. US West Texas Intermediate crude climbed $1.02, or 1.61%, to $64.39. On a weekly basis, both benchmarks were on track to settle higher after declining for two straight weeks. Brent has advanced 2.75% this week, while WTI is trading 4.9% higher. China's official Xinhua news agency said trade talks between Xi and Trump took place at Washington's request on Thursday. Trump said the call had led to a "very positive conclusion", adding the US was "in very good shape with China and the trade deal". Canada also continued trade talks with the US, with Prime Minister Mark Carney in direct contact with Trump, according to Industry Minister Melanie Joly. The oil market continued to swing with news on tariff negotiations and data showing how trade uncertainty and the impact of the US levies are flowing through into the global economy. "The potential for increased US sanctions in Venezuela to limit crude exports and the potential for an Israeli strike on Iranian infrastructure add to upside risks for prices," analysts at BMI, a Fitch affiliate, said in a note on Friday. "But both weaker demand for oil and increased production from both OPEC+ and non-OPEC producers will add to downside price pressures in the coming quarters." Top exporter Saudi Arabia cut its July crude prices for Asia to near two-month lows. That was a smaller price reduction than expected after OPEC+ agreed to ramp up output by 411,000 barrels per day in July. The kingdom had been pushing for a bigger output hike, part of a broader strategy to win back market share and discipline over-producers in OPEC+, which groups the Organisation of the Petroleum Exporting Countries and allies including Russia. "The market looks balanced in 2Q/3Q on our estimates as oil demand rises in summer and peaks in July-August, matching supply increases from OPEC+," HSBC said in a note.
