Australia, New Zealand dollars attempt to steady after sell-off, Fed decision looms
By Stella Qiu
SYDNEY, June 18 (Reuters) - The Australian and New Zealand dollars attempted to recover from an overnight slump on Wednesday, although much will depend on developments in the Israel-Iran conflict as President Donald Trump warned U.S. patience is wearing thin.
The commodity-sensitive currencies often track global risk sentiment and tend to take a hit when equity markets slide. Overnight, Wall Street ended in the red, bonds rallied while the dollar found some safe-haven bids.
The Aussie AUD=D3 bounced 0.4% on Wednesday to $0.6496, having slid 0.8% overnight to as low as $0.6467. It has support around $0.6460 to lean on, while resistance is heavy at $0.6550.
The kiwi dollar NZD=D3 inched up 0.2% to $0.6027, after dropping 0.8% overnight. It has solid support around $0.5996.
The two have been doing round trips over the past few sessions as investors assess how long the conflict in the Middle East could last and whether it could disrupt oil supplies from the region. That will likely factor into the Federal Reserve's policy decision due later in the day, although the expectation is for it to stand pat on rates for now.
"We think the risks ahead of Fed's meeting are that the situation in the Middle East could become a catalyst to sound more dovish," said Tony Sycamore, analyst at IG.
"The Fed may use the meeting to set up a 25 basis point rate cut in July, earlier than the market's current expectation of a September meeting."
Australia's Treasurer Jim Chalmers said the government would consider tax reforms to boost flagging productivity, although there were not many details.
Its statistics bureau will publish the monthly jobs report on Thursday where expectations are for a gain of 22,500 jobs in May and a steady jobless rate of 4.1%.
The labour market has been surprisingly resilient and another strong print could challenge market pricing for a rate cut next month, which is now priced at 75%.
New Zealand will release its first-quarter gross domestic product figures on Thursday. Forecasts are for a solid quarterly growth rate of 0.7% as the economy slowly emerged from a policy-induced downturn.
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