SYDNEY: The Australian and New Zealand dollars hovered near 2025 highs on Tuesday, having cracked major resistance as U.S. President Donald Trump's tirade against the Federal Reserve further undermined investor trust in U.S. assets.
The Aussie was at $0.6417, after rising 0.6% overnight to a four-month high of 0.6436. It broke a key resistance level of $0.6409, which is now the near-term support.
The kiwi dollar was defiant at $0.5998, having gained 1.1% overnight to $0.6019, the highest since early November. It faces resistance at $0.6037, while support is at the 200-day moving average of $0.5883.
On Monday, Trump ramped up his criticism of Fed Chair Jerome Powell, calling him a "major loser" and demanding that he lower interest rates immediately. That fuelled worries about the Fed's independence, with the dollar falling to a three-year low and Wall Street tumbling.
"Unfortunately for the U.S., the way the administration has dealt with these issues means this kind of triple threat facing U.S. assets - the weakness in equities, the weakness in fixed income and the weakness in the dollar - look like they're going to continue for the near-term," said Richard Yetsenga, chief economist at ANZ Group.
Tony Sycamore, analyst at IG, said if the Australian dollar can break sustainably above the 200-day moving average of $0.6474, it would be the final confirmation that the currency has completed a V-shaped bottom and a rally to 68/69 cents is underway.
Down Under, it is a quiet, holiday-shortened week with little data or events scheduled, and the movements in the two Antipodeans largely dependent on the flows in the U.S. dollar.
Against the kiwi, the Australian dollar hovered just above a one-year low at NZ$1.0697, in part reflecting market wagers on a lot more easing from the Reserve Bank of Australia as U.S. tariffs darken the outlook for global economy.
For the RBA, swaps are implying a 25 basis point cut has been fully priced in at its next meeting in May, with an about 20% chance of a 50 bps move. A total easing of 125 bps has been expected this year.
Markets still fully expect the Reserve Bank of New Zealand to cut its 3.5% cash rate by 25 basis points in May, and lower it to 2.75% by year-end. - Reuters
