Australia, New Zealand dollars hit 10-week highs on pared Fed rate risk

Business Recorder reported that the Australian and New Zealand currencies climbed to 10-week highs on Monday after traders trimmed their bets on a Federal Reserve rate increase. The Aussie added 0.2% to $0.7098, extending a seven-week winning run and pushing through resistance at $0.7089, with buyers now eyeing 72 cents, the peak reached in May. The kiwi rose 0.3% to $0.5905.

Softer American data drove the shift, with inflation readings cooler than expected and an unexpected fall in retail sales. That led investors to drop wagers on an imminent Fed increase, and market pricing now gives roughly a 71% chance that the Fed keeps rates unchanged next month. Sean Callow, a senior analyst at ITC Markets, linked the Aussie's climb to its usual high-beta sensitivity to the greenback, along with a run of fresh peaks in US equities and the RBA's hawkish stance.

Thursday's Australian jobs data is in focus, with forecasts pointing to 15,000 new positions in July and unemployment steady at 4.4%. The Reserve Bank of Australia sees jobs conditions as having softened somewhat and expects joblessness to climb to 4.8%, while markets are split on a further rise to 4.6% by year end. Across the Tasman Sea, the Reserve Bank of New Zealand meets in early September, where traders have priced in roughly an 86% likelihood of a quarter-point hike from the current 2.5% cash rate.