Australia, NZ dollars under pressure as China's fiscal stimulus disappoints
SYDNEY, Oct 14 (Reuters) -The Australian and New Zealand dollars fell on Monday after Beijing's fiscal stimulus briefing lacked details and disappointed investors, although a tepid response in Chinese markets likely limited the downside.
The Aussie AUD=D3 edged down 0.2% to $0.6736, having finished last week 0.7% lower as shifting U.S. interest rate expectations turned against it. It now has support at 67 cents and the 200-day moving average of $0.6626.
The kiwi dollar NZD=D3 also slipped 0.3% to $0.6091, after losing 0.8% last week to break key support at the 200-day moving average of $0.6095. It remains to be seen if the kiwi can rebound above this critical level.
The much-anticipated briefing from China's Ministry of Finance on Saturday failed to unveil the specific scale of the expected fiscal stimulus, although the minister did pledge to "significantly increase" debt to help the economy.
Chinese shares oscillated between gains and losses, with blue chips .CSI300 last up 0.9%. Hong Kong's Hang Seng index .HSI, however, fell 1.1%. The Chinese yuan CNY=CFXS slipped 0.1% to 7.0752 per dollar.
The Antipodean currencies are often traded as liquid proxies for the Chinese yuan as Beijing is the top trading partner of Australia and New Zealand.
"AUD/USD will test 0.6685 this week in our view," said Joseph Capurso, head of international economics at the Commonwealth Bank of Australia. "The stronger USD and disappointment from the Chinese budget package will weigh on commodity prices and AUD/USD over the next few days."
Traders are looking ahead to Australian jobs data on Thursday, where economists are expecting a rise of 25,000 for September and no change in the jobless rate at 4.2%. That follows a few months of blockbuster figures that had markets almost abandon bets of a rate cut by year-end.
Swaps now imply just a 38% chance of a rate cut in December.0#RBAWATCH
It is also looking to be a big week for the kiwi too, with the release of the third-quarter inflation figures due on Wednesday that could shift bets on the size of the next interest rate cut expected in November.
Analysts forecast quarterly CPI picked up to 0.7% in the third quarter, from 0.4% in the second quarter, although the annual rate is seen as continuing to slow to 2.3% from 3.3%.
"Our sense is that annual CPI of 2.0% or 2.1% would see markets more vigorously debate the merits of a 75bp cut next month," said ANZ analysts. "However, a print of 2.4% or 2.5% would likely see markets come back towards 50bp, which is where most analysts sit."
Markets are leaning towards a half-point reduction, which is 80% priced in, while a quarter-point move is seen as a 20% chance. 0#RBNZWATCH
Reporting by Stella Qiu; Editing by Jamie Freed
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
