The Australian and New Zealand dollars snapped four sessions of gains and fell on Thursday, after the U.S. Federal Reserve set off a wave of dollar buying by announcing no new aggressive easing measures after its overnight policy meeting.
The Aussie <AUD=D3> caught a brief surge in support after surprisingly robust jobs data, but soon fell back to trade 0.4% lower at $0.7278.
The kiwi <NZD=D3> dipped 0.6% to $0.6692 and the U.S. dollar rose broadly across the board. [FRX/]
"It's just too difficult a day for the Aussie to rally, really," said Westpac FX analyst Sean Callow. "The market was already positioned for the Fed to drive another wave of U.S. dollar weakness and there was always the risk that that would be excessive."
That overwhelmed the impulse to buy the Aussie in the wake of data that showed a drop in the unemployment rate to 6.8% - miles below the 10% level that the central bank has been expecting it to hit by year's end.
"The full response is probably going to come down the track, in terms of forecasts for Q3 GDP or what the RBA might do," with talk of a trim to the cash rate likely to subside for now, Callow said.
Perhaps a hint of that was evident in a bounce in the Aussie/kiwi cross rate to NZ$1.087 per Australian dollar <AUDNZD=>, though other crosses traded heavy with the mood as speculators unwound their bets on a super-dovish Fed.
The Fed's meeting was its first since adopting a more tolerant approach to inflation, and it vowed to keep rates near zero until prices overshoot 2% growth "for some time".
"Dollar bears may have felt some disappointment and wanted stronger guidance," said Kerry Craig, global market strategist at J.P. Morgan Asset Management.
Both the Aussie and kiwi remain broadly steady for the week and most traders don't expect further weakness since the big picture of a U.S. central bank determined to keep rates low for a long time remains intact.
Australian government bond futures were flat at the longer end, with the 10-year contract <YTCc1> steady at 99.08. The three-year bond contract <YTTc1> fell one tick to 99.725.
New Zealand government bonds <0#NZTSY=> extended a Wednesday rally in the wake of an upbeat pre-election fiscal update which showed improved tax-take and economic forecasts.
The yield on 10-year New Zealand government debt fell 1.3 basis points to 0.595% <NZ10YT=RR> and five-year yields <NZ5YT=RR> edged down to a record-low 0.028%.
(Reporting by Tom Westbrook in Singapore; Editing by Jacqueline Wong)
