On Thursday, Aussie dollar was down while Kiwi dollar was in a possible weakening position for a fifth straight day as the US Dollar extended gains amid supported expectations of at least three rate increase in the U.S. this year.
The AUD fell to $0.7792, hitting near a one and half week low of $0.7759 earlier this month. Technical analysts observe strong chart support around $0.7760. The currency slipped more than 3 percent this month after robust gains in December and January.
The NZD slid to a one-week low of $0.7307. It was last flat at $0.7312.
The two currencies, which are diametrically opposed to each other, have had progressive run since late 2017, greatly after a strong investor interest in risky assets and as the US dollar struggled from multi-year lows.
But the outlook for a more aggressive US Federal Reserve has supported the dollar. The minutes of the Fed’s last policy meeting, which was released on Wednesday, is of importance to market expectations. The minutes accentuated hopes of faster economic growth due to fiscal stimulus.
Members, in particular, agreed that “strengthening in the near-term economic outlook increased the likelihood that a gradual upward trajectory of the federal funds rate would be appropriate.”
That caused investors to lessen the probabilities of immediate hikes with a host of Fed fund futures hitting contract lows. This year, there are three rate hikes that are now almost fully priced, compared to two in December.
“If one were to split hairs, one could argue that these statements only imply increased confidence in the need for the three 2018 hikes,” said Jesse Edgerton, a JPMorgan analyst.
“But we think increased confidence in the need for further hikes will accompany a perceived need for more than three hikes among a growing portion of the committee,” he added.
“We thus remain comfortable with our forecast for four hikes in 2018.”
In contrary, the Reserve Bank of Australia (RBA) has made certain the point that interest rates in the country were set to stay at record lows for a long time.
The futures market infers around a 40 percent likelihood of a rate hike by August and is not completely priced for a move of 25 basis points to 1.75 percent until early next year.
In New Zealand, the policy outlook was the same where the central bank pointed out a first move might not arrive until mid-2019.
Meanwhile, New Zealand government bonds lowered, making yields 2.5 basis points higher at the long end of the curve.
Australian government bond futures were mixed, with the three-year bond contract jumped 1 tick at 97.865. The 10-year contract slid 1.5 ticks to 97.1300.
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