SYDNEY, July 16 (Reuters) – The Australian and New Zealand dollars found support on Wednesday after losing ground to a broadly firmer U.S. dollar, with the Aussie managing to hit a fresh five-month top on a struggling Japanese yen.
The U.S. currency was lifted by Treasury yields after June consumer price data showed tariffs were starting to push up costs in import-heavy sectors, leading investors to trim bets on the extent of further rate cuts.
That saw the Aussie retreat almost 0.5% overnight to as low as $0.6508, before bouncing 0.2% to $0.6529 in local trade. More support lies at $0.6485, with resistance at the recent eight-month high of $0.6595.
The kiwi dollar edged back up to $0.5960, having also dipped 0.5% overnight to $0.5939. Support lies around $0.5926, with resistance at $0.6005 and $0.6043.
The Aussie was aided by gains on the yen, where it crossed 97.00 for the first time since mid-February and looked set to test resistance at 97.30.
Australian 10-year bond yields tracked the sell off in Treasuries to touch a seven-week top of 4.44%, leaving the spread to the U.S. at -6 basis points.
On the domestic front, the next major hurdle for the Aussie will be jobs figures for June on Thursday. Median forecasts are for a bounce of 20,000 after a rare dip in May, with the jobless rate holding at 4.1% and where it has been for much of the past year.
The unemployment rate has been stuck between 3.9% and 4.2% since late 2023, a surprising stretch of resilience in the face of a slowdown in the overall economy.
This was a major reason the Reserve Bank of Australia felt it had time to skip a rate cut this month to wait for more inflation news. Any uptick in unemployment, therefore, would make it much more likely the central bank will ease at its August meeting.
Analysts at NAB noted the rotation of respondents in the jobs survey suggested there was some risk of a higher unemployment rate in June.
“Our base case remains for a modest rise in the unemployment rate looking forward, but not for a sharp deterioration,” they wrote in a note.
Markets imply around an 80% chance of a quarter-point rate cut to 3.60%, but were equally confident of a move this month only to be badly wrongfooted.
(Reporting by Wayne Cole; Editing by Edwina Gibbs)
