AUDNZD -Milk vs Iron ore in focus

SYDNEY/WELLINGTON, May 26 (Reuters) – The Australian and New Zealand dollars nursed losses versus their U.S. counterpart on Friday following a commodities rout, but were on track for hefty weekly gains against a soggy pound.

The Australian dollar dropped to $0.7431, the weakest this week, having skidded more than a full U.S. cent in one session.

Much of the fall in the Aussie came after crude oil prices tumbled 5 percent on Thursday, along with a slide in prices of iron ore, Australia‘s top export earner.

Chart resistance at 75 cents also undermined the Aussie.

“We don’t even need a crystal ball for this view as the market had all but convinced itself that selling above $0.7500 is the trade,” said Stephen Innes, a senior trader at OANDA.

It lost even more ground against the Kiwi dollar to NZ$1.8359, to be down 2.4 percent for the week. If sustained, it would be the second-largest loss this year.

The Kiwi dollar was a clear outperformer against its Aussie cousin, which slipped to a three-month trough of NZ$1.0571 . The Aussie, last at NZ$1.0589 was on track for a 1.7 percent drop this week.

“Given the resilience in milk prices and the recent wobbles in iron ore, high NZD trade balance notwithstanding, a break of NZ$1.06 should see significant buy-in which could pressure AUDUSD towards $0.7400 level,” said OANDA’s Innes.

New Zealand government bonds rose, sending yields five basis points lower on the long end of the curve.

Business Times via Reuters

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes
Stephen Innes

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