© Reuters. Illustration photo of an Australia Dollar note
By Swati Pandey
SYDNEY (Reuters) – The Australian and New Zealand dollars held near 2-1/2 week highs on Monday as risk assets came back in vogue amid expectations policymakers around the world will take measures to support slowing economic growth.
Three developments on Friday gave the antipodean currencies a leg-up. First, Beijing announced a new round of trade talks with Washington. Then, China aggressively eased monetary policy, slashing bank reserve requirements to prop up the country’s economy.
And investors got more to cheer about when U.S. Federal Reserve chair Jerome Powell said he would be patient and flexible on interest rate hikes.
These proved a much-needed tonic for global shares and sent the risk-sensitive Australian dollar
The and went into a tailspin last week as whispers of a possible recession in the United States grew louder, making some investors start pricing in a cut in the Fed funds rate in 2019.
Uncertainties stemming from a Sino-U.S. trade war also were stone in the shoe for markets after disappointing manufacturing data readings in both countries.
The worries sent the Aussie to near-decade lows of $0.6715 Thursday morning in a wild ride that included a computer-driven flash crash.
The currency shed all of those losses the following day and finished last week about 1 percent higher, although analysts remain cautious.
“The Aussie’s short-term momentum might be to the topside but the risks that drove the local currency to ten-year lows remain,” Steven Dooley, currency strategist at Western Union Business Solutions, said in a note on Monday.
“In particular, any further slowdown in U.S. or Chinese manufacturing could pressure the AUD.”
The New Zealand dollar
The kiwi ended last week 0.5 percent higher, led by a late risk rally on Friday.
New Zealand government bonds were barely changed.
Australian government bond futures eased, with the three-year bond contract
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Latest posts by investing.com (see all)
- Forex – Sterling Rebounds on "Diminished" Brexit Risk; Dollar Flat - January 16, 2019
- Theresa May Survives Vote of No Confidence; Pound Flat - January 16, 2019
- All clear or keep clear? Turkey's lira still vulnerable - January 16, 2019