REFILE-Australia, NZ dollars fall again as relief rally proves fragile
By Stella Qiu
SYDNEY, March 24 (Reuters) - The Australian and New Zealand dollars fell again on Tuesday as investors questioned whether the brief rally in global stocks would last, after U.S. President Donald Trump delayed his ultimatum to strike Iran for five days.
Trump said on social media that talks with Iran were productive and he would order the military to delay strikes on Iranian power plants and energy infrastructure by five days, just hours before his previous ultimatum expires. Iran's foreign ministry, however, denied the talks shortly thereafter.
Wall Street rallied more than 1% overnight, although the mood soon turned cautious in Asia, with oil up more than 3% and Nasdaq futures NQc1 off 0.6%.
The risk-sensitive Australian dollar AUD=D3 fell 0.6% on Tuesday to $0.6970, having bounced off a six-week low of $0.6911 overnight to finish just 0.2% lower. Down for a third straight day, it now faces resistance at 70 cents with the next major support level at $0.6897.
The kiwi dollar NZD=D3 also dropped 0.4% to $0.5833, having hit a two-month low of $0.5765 overnight before rallying to close the day 0.5% higher.
"On the Middle East, my top line is we don't know how this plays out," said Alex Brazier, global head of investment at BlackRock.
"I think, though, regardless of that, we feel we're in a period of prolonged disruption rather than a sort of short shock, and we don't think we'll go back to where we were."
Early on Tuesday, Anna Breman, Governor at the Reserve Bank of New Zealand, said that monetary policy would look through a temporary spike in energy costs, but higher rates could be needed if inflation threatened to become entrenched.
"Governor Breman emphasized that the RBNZ would be focused on medium-term inflation pressures, and that for now there's little evidence these have lifted to suggest a need for near-term OCR hikes," said analysts at Westpac in a note to clients.
"It’s unlikely the RBNZ will be raising rates in the next 6 months."
Two-year swap rates NZDSM3NB2Y= fell 9 basis points to 3.5595%, having hit a 16-month high of 3.6759% just on Monday, also helped by overnight moves in Treasury yields.
Swaps also pared back the chance of a rate hike in May, with the probability now below 60%, down from almost 70% before. For all of 2026, a total of 80 basis points of tightening is still priced in.
Across the Tasman sea, a survey showed Australia's consumer confidence slid to its lowest level in more than half a century last week as rising borrowing costs and a spike in petrol prices darkened the economic outlook.
Markets now believe a rate hike in May from the Reserve Bank of Australia is a toss-up after two consecutive rises this year. About 65 bps of tightening is priced in for the rest of 2026.
