Australia, NZ dlrs in full retreat as investors rush from risk
By Wayne Cole
SYDNEY, July 25 (Reuters) -The Australian and New Zealand dollars huddled near three-month lows on Thursday as a gathering sell-off on global share markets soured investor appetites, boosting safe havens such as the yen and Swiss franc.
Disappointing surveys on European manufacturing also added to concerns about world growth and squeezed commodities, with copper skidding to its lowest in three months.
The rush out of risk saw the Aussie retreat to $0.6565 AUD=D3, for a loss on the week so far of 1.8%. That left it a long way from the recent top of $0.6798 and breached the 200-day moving average at $0.6586.
The Aussie also reeled to 101.05 yen AUDJPY=, having sunk 1.6% overnight and bringing losses in the past two weeks to almost 8%. It dropped 1.2% on the Swiss franc AUDCHF=R to hit a 14-week low.
The kiwi dollar had lost 1.5% for the week to stand at $0.5918 NZD=D3, and was threatening major support at $0.5853.
The rout on Wall Street led markets to price in a 100% chance of a rate cut from the U.S. Federal Reserve in September, and stoke speculation it would take a more dovish track at a policy meeting next week.
That, in turn, led investors to trim the probability of a rate hike from the Reserve Bank of Australia (RBA) at its August policy meeting, which is now put at 17%. 0#RBAWATCH
Much will depend on inflation figures for the second quarter due on July 31, where an annual rise of 4.0% or more in core inflation would ramp up pressure for a tightening.
As for the Reserve Bank of New Zealand (RBNZ), a run of soft data has markets baying for early and aggressive rate cuts with an August easing now priced at a 44% probability.
Some 68 basis points of cuts are implied for this year, and another 108 basis points for 2025. 0#RBNZWATCH
Yields on two-year bonds NZ2YT=RR dropped to their lowest since early 2023 at 4.398%, having fallen 50 basis points so far this month.
"We now expect the RBNZ to cut 25bp every meeting starting in October 2025, implying 2 cuts in 2024, 7 cuts in 2025 and no cuts in 2026," said analysts at Goldman Sachs in a note.
"The are risks of an earlier cut in August if the upcoming labour market data are weaker than expected."
Reporting by Wayne Cole; Editing by Stephen Coates
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