Australia, NZ dollars hit two-year low as risk aversion reigns Pipa News

Australia, NZ dollars hit two-year low as risk aversion reigns

SYDNEY: The Australian and New Zealand dollars closed near their lowest levels in two years on Friday, as an aggressive US Federal Reserve, concerns about global growth, and geopolitical concerns from Russia’s war in Ukraine protected- Haven strengthened the dollar.

The Aussie turned little at $0.6645 at $0.6645 after a volatile session for the first time since May 2020, which saw it fall from the key 66 cents high to $0.6574 for the first time.

This was leading to a weekly loss of 1%. Risk-off sentiment prevailed after the Federal Reserve raised interest rates by three-quarters of a percentage point for the third time in a row on Wednesday, with Chairman Jerome Powell saying policymakers will “keep up” their fight to beat inflation.

However, Antipodean later found some respite and ended the session slightly higher, as the US dollar relinquished some gains on the first currency intervention by Japanese monetary authorities since 1998 to boost the battered, rate-sensitive yen. .

It fell 1% against the Japanese currency, hovering around 94.62 yen.

Australia, NZ dollars left far behind as others rush to hike

After hitting an epidemic low of $0.5806 in the previous session, the kiwi dollar was hanging at $0.5852 on Friday. It was set to skid 2.3% for the week.

Pessimism on the global economy, and China in particular, has weakened both resource-rich currencies along with a fall in commodity prices.

“Next are flash estimates of September PMIs for several major economies. A further slowdown in the PMI could favor the USD especially against the cyclical AUD and NZD,” said Christina Clifton, an economist at the Commonwealth Bank of Australia.

Australia’s 10-year government bond yield rose 20 basis points to 3.912%, the highest since June this year, after the highest rise in the US benchmark yield since 2011. The three-year yield rose 25 basis points to 3.655%.

The return premium of debt in Antipodian markets over treasuries has narrowed to a meager 20.3 basis points in recent weeks as the Fed remains fresh.

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