Australia, NZ dollars pinned near multi-month lows, RBA set to hike

Business Recorder reported that the Aussie and the kiwi were sitting close to multi-month troughs on Monday, as oil prices climbed and added to inflation risks. That rise also lifted US yields, and the technical outlook for both currencies has become more bearish. The Aussie held at $0.7020, having slipped 1.5% last week and reached an eight-week bottom of $0.7004.

The Aussie has now posted three straight weekly declines and has broken below the 200-day moving average of $0.7025, leaving it well under a four-month high of $0.7238 recorded a little over two weeks earlier. Markets have eased their bets on further rate increases, and the Reserve Bank of Australia is almost certain to add a 25 basis point rise, taking the rate to 4.60% on Tuesday, its fourth hike this year.

Across the Tasman Sea, the kiwi fell to a three-month low of $0.5650 after dropping 1.1% last week, marking its fifth consecutive weekly decline. Paul Bloxham of HSBC expects the Reserve Bank of New Zealand to take a more hawkish stance after two hikes this year, as the economy gathers momentum. Markets now put an 80% chance on a quarter point increase to 3.0% at the central bank's next meeting on October 28.