Australian dollar retreats from resistance, nears 8-mth trough on kiwi -February 21, 2024 at 09:04 pm EST

SYDNEY, Feb 22 (Reuters) – The Australian dollar
recoiled from a key hurdle against its U.S. counterpart on
Thursday and hovered near an eight-month low against the kiwi on
the risk of another near-term interest rate hike in New Zealand.

The Aussie and the kiwi also hit fresh nine-year peaks on
the yen as markets wagered that the Bank of Japan will keep
policy accommodative. The two Antipodeans are among the most
liquid of carry trades where investors typically borrow yen at
ultra-low rates to buy higher yielding currencies.

The Australian dollar was flat at $0.6554, having
moved as high as $0.6572 overnight. The 200-day moving average
of $0.6564 is proving to be heavy resistance.

It hit 98.67 yen, the highest in nine years.

The kiwi dollar rise to a fresh one-month top of
$0.6198, having risen 0.2% overnight to as high as $0.6198. It
climbed 0.2% to 93.2 yen, also a nine-year top.

The risk of a near-term rate hike from the Reserve Bank of
New Zealand was in stark contrast to bets that the Reserve Bank
of Australia is done tightening. The Aussie hovered at NZ$1.0576
, just a touch above an eight-month low of NZ$1.0568.

“The RBNZ may opt to stop crying wolf and deliver a 25bp
hike, and signal the risk of yet another move towards 6%,” said
Jarrod Kerr, chief economist at Kiwibank.

“It’s overkill, in our opinion, but the RBNZ may opt to
stamp out inflation, hard.”

In the broader foreign exchange market, the dollar was
broadly steady after minutes from the Federal Reserve’s last
meeting showed concerns about cutting interest rates too soon,
much as expected.

Local yields tracked their U.S. counterparts higher due
to a weak 20-year bond auction. Australia’s three-year
government bond yield rose 4 basis points to 3.782%,
while ten-year yield edged 3 bps higher to 4.22%.

(Reporting by Stella Qiu
Editing by Shri Navaratnam)