Australia, NZ dollars hit multi-month lows as Trump steps up tariff threat
SYDNEY, Nov 26 (Reuters) -The Australian and New Zealand dollars took a beating on Tuesday as U.S. President-elect Donald Trump stepped up his threat to slap hefty tariffs on Canada, Mexico and China, sending the greenback sharply higher.
The Aussie AUD=D3 plunged 1% to $0.6438, the lowest since early August and breaking a key support level of $0.6441. It had failed to break resistance at $0.6550 overnight and now support is far away at the August low of $0.6349.
The kiwi NZD=D3 tumbled 0.6% to $0.5812, the lowest in a year, and support is scant until $0.5774, the trough from October 2023.
It has been feeling an added weight ahead of a Reserve Bank of New Zealand policy meeting on Wednesday where markets are wagering a 40% probability that the central bank can cut interest rates by a whopping 75 basis points. 0#NZDIRPR
Citing concerns over illegal immigration and the trade of illicit drugs, Trump pledged a 25% tariff on all products from Mexico and Canada from his first day in office, and an additional 10% tariff on goods from China.
"A good deal of uncertainty is hanging over the Aussie because we don't know if Bessent is going to moderate Trump," said Tony Sycamore, analyst at IG, referring to Scott Bessent, Trump's pick for Treasury Secretary.
"The downtrend (for AUD) is very very solid ... I'm still looking for another leg low like down towards multi-week trend line around 0.6360 to 6350. So there's still another cent lower for me to go in this move."
The Australian dollar is often sold as a liquid proxy for the yuan given China's status as Australia's biggest trading partner. The offshore yuan CNH= also fell 0.3% to 7.2683 per dollar, the lowest in four months after Trump vowed tariffs.
Wednesday is shaping up to be a key day for the two antipodeans. Australia will release the monthly inflation data for October just before the RBNZ rate decision.
Forecasts are centred for a rise of 2.3% in October, picking up from 2.1%, but the results are unlikely to move the rate pricing much as the first month of the quarter contains little new information on the inflationary pulses in the services sector.
The Aussie also pared some recent gains on the kiwi AUDNZD=R, off another 0.3% on Tuesday to NZ$1.1091 and way below a two-year high of NZ$1.1177 hit last Friday.
Reporting by Stella Qiu; Editing by Himani Sarkar
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