Australia dollar skids to 14-week trough, key support under threat

Australia dollar skids to 14-week trough, key support under threat

© Reuters.  Australia dollar skids to 14-week trough, key support under threat© Reuters. Australia dollar skids to 14-week trough, key support under threat

By Wayne Cole

SYDNEY, March 29 (Reuters) – The Australian dollar hit its low for the year on Thursday as quarter-end demand lifted its U.S. counterpart and combined with weakness in commodity prices to shove the currency close to a major chart bulwark.

The dollar AUD=D4 was labouring at $0.7647, after sinking under $0.7670/75 support and touching its lowest since mid-December.

The kiwi dollar was holed up at $0.7193, having lost 1.1 percent overnight in a sharp correction from the week’s $0.7304 peak. Major chart support lies at its March trough of $0.7154.

Aussie bears were now eyeing a long-term trendline that stretched all the way back to early 2016 when the currency cratered under $0.6900. This thin line of support currently comes in around $0.7600/10 and a breach would open the door for a much deeper retreat.

“If it breaks, then the December low at 75 cents is next in line, with $0.7475 below that and then $0.7322,” said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.

“$0.7130 has offered decent support over the past couple of years as well.”

Indeed, there was a risk of a real rout should the latest setback in U.S. stocks, and particularly the tech sector, morph into something nastier, he added.

Faith in tech stocks took a beating on Wednesday when shed more than $53 billion in market value following a report that President Donald Trump indicated he wanted to rein in the company.

Adding to the pressure on the Aussie was a broad short-covering bounce in the U.S. dollar, which made a notable comeback on the Japanese yen. Traders said speculators had got very short of dollar in recent weeks and were rushing to book profits as the quarter ended.

The bounce in the U.S. currency and lingering worries about a global trade war were also pressuring commodity prices, with China iron ore futures DCIOcv1 sinking 22 percent since late February.

All of which completely overshadowed some upbeat domestic data that showed job vacancies climbed to an all-time high in the three months to February. series has been a reliable leading indicator of labour demand and suggests the year-long run of record jobs growth could last for a some time yet.

In the bond markets, yields on Australian 10-year paper held at 2.59 percent having hit a three-month low on Wednesday.

The three-year bond future YTTc1 dipped 2 ticks to 97.875, while the 10-year contract YTCc1 added 1 tick to 97.4050.

New Zealand government bonds 0#NZTSY= eased in price, lifting yields 3 basis points at the long end of the curve.

(Editing by Sam Holmes)

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