Aussie under pressure amid commodity slide, kiwi steadies

Market trading boards are seen at the Australian Securities Exchange in Sydney, Friday, February 9, 2018. ( AAP Image/Ben Rushton) NO ARCHIVING

TOKYO, Nov 18 (Reuters) – The Australian dollar languished near a six-week trough on Thursday, undermined by a slide in oil and other commodity prices, while the kiwi tried to lift off a one-month low ahead of the central bank’s rate-setting meeting next week.

The Aussie was also still smarting from Reserve Bank of Australia’s push back against bets for 2022 interest rate hikes earlier in the week, with wage inflation data on Wednesday doing nothing to boost the case for tighter policy.

Australia’s dollar was about flat at $0.7264 from the previous session, when it marked a two-day 1.12% tumble and touched a low of $0.7259 for the first time since Oct. 6.

Crude benchmarks slumped to four-week lows after OPEC warned of impending oversupply, while Reuters reported that the United States was asking other major global oil consumers like China and Japan to consider a coordinated release of oil reserves.

“Once again, we find ourselves at the mercy of headlines around whether the U.S. and now China will release crude reserves into the system,” Chris Weston, head of research at brokerage Pepperstone in Melbourne, wrote in a client note.

“AUD is being taken down, with AUD/USD printing a lower low and I’d be moving my stop lower from Monday’s short call” at$0.7390, he wrote.

Some risk aversion also dragged on Australia’s currency, as inflation fears sunk shares of U.S. retailers, dragging Wall Street lower overnight, which buoyed safe havens like the yen.

The Aussie changed hands at 82.90 yen, holding close to a more than one-month low of 82.86 reached Wednesday.

New Zealand’s kiwi dollar rose 0.09% to $0.7005, regaining the psychological $0.70 level, but still not far from Wednesday’s one-month low of $0.6980.

Traders appear certain that the Reserve Bank of New Zealand will hike rates again on Wednesday, after kicking off its tightening campaign last month.

Swaps are fully priced for a move to 0.75%, and imply about one third odds of a half point rise to 1.0%.

The central bank will release a survey of inflation expectations at 3 p.m. local time.

“Even with the most recent COVID restrictions, demand is running hot in the New Zealand economy and inflation pressures are building,” Michael Gordon, an economist at Westpac, wrote in a research note, predicting a quarter point increase next week, but warning of a “meaningful risk” of a half point move.

Meanwhile, Australia’s futures market remains at loggerheads with RBA Governor Philip Lowe’s prognosis for monetary policy, although bets have become less aggressive over the course of the week. A first move to 0.25% is implied by the middle of next year.

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