Australia, New Zealand dollars near multi-month lows as greenback gains

[SYDNEY] The Australian dollar slipped again on Friday to a near five-month trough while its New Zealand cousin paused after eight straight sessions of losses as the greenback looked set to continue climbing.

The Australian dollar eased to US$0.7548, a level not seen since early December. Technical analysts see critical support at US$0.7498.

The Aussie fell on every single day of this week and is on track for its second straight weekly loss.

The New Zealand dollar was a shade softer at US$0.7060, its lowest since late December.

The kiwi is down more than 2 per cent for the week so far, following a 1.9 per cent drop last week.

It has now stretched its run of losses to eight sessions, the longest since November 2017.

The declines in the antipodean currencies came as US 10-year yields rose above the psychological 3 per cent barrier earlier this week.

The upsurge has pushed the dollar to its highest since early January against a basket of currencies.

But other factors are also weighing on the Aussie.

"It is noticeable that the AUD has come under increasing pressure since the start of the year as both iron ore and Chinese equity prices have weakened," said Simon Derrick, chief currency strategist at BNY Mellon.

Dalian iron ore has fallen nearly 14 per cent this year so far. Separately, data out on Friday showed profits earned by China's industrial firms slowed sharply in March.

China is Australia's leading trading partner and the Aussie is often played as a liquid proxy for the Chinese yuan.

"With the mood music out of Beijing sounding increasingly gloomy over the past week, the risk is that support from this sector for the AUD continues to weaken," Mr Derrick added.

Shanghai's SSE Composite index and China's blue-chip CSI 300 are both set to record their third straight monthly losses in April.

The Reserve Bank of Australia (RBA) board meets on Tuesday for its monthly policy decision where it is all but certain to hold rates at a record low 1.50 per cent.

On Friday, the RBA will issue its quarterly statement on monetary policy, in which analysts expect it to trim Australia's growth forecast.

New Zealand government bonds rose, sending yields down about 5 basis points at the long end and 2 basis points lower at the short end of the curve.

Australian government bond futures gained, with the three-year bond contract up 3 ticks at 97.740. The 10-year contract added 3.5 ticks to 97.1550.

REUTERS