Aussie hit on debt ceiling worries
The Australian dollar was sharply lower overnight as global sharemarkets fell with markets worried as negotiations over the US debt ceiling continued to stall.
The S&P 500 fell 0.7% while the Nasdaq dropped 0.5%.
US Treasury Secretary Janet Yellen has indicated the US government could run out of cash reserves by 1 June – next Thursday – and markets have become more skittish as this critical date nears.
The AUD/USD fell 1.0% as it broke key support at 0.6550 and dropped to the lowest level since November.
NZD tumbles as RBNZ hits pause
The New Zealand dollar tumbled after yesterday’s Reserve Bank of New Zealand decision seemed to signal the end of NZ’s rate hiking cycle.
The 25-basis point hike lifted NZ rates to 5.50% – the highest in the developed world – but the RBNZ’s forecasts indicated that it sees rate hikes as ending at 5.50%.
The RBNZ said it expected economic growth to turn negative in the September quarter while it expected to begin cutting rates in just over 12 months (in the September quarter of 2024).
The NZD/USD tumbled on the news, falling 2.1%, and dropping to the lowest level since early March.
US GDP, PCE due
The US Federal Reserve minutes were released this morning with the details of the Fed’s meeting earlier this month signalling some decision-makers were reluctant to hike, although the decision was eventually unanimous.
The discussions signal that the Fed might pause its rate hiking cycle when it next meets in mid-June.
Tonight, US preliminary March-quarter GDP numbers are due, with last month’s advance reading showing that consumer spending was the key driver of growth, while inventory drawdowns hit activity.
Tomorrow, all eyes are on the US personal consumption and expenditure numbers – the Fed’s preferred measure of inflation.
Aussie, kiwi hit lows
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 22 – 26 May
All times AEST
Have a question? [email protected]
