The Australian and New Zealand dollars were under pressure on Thursday, as evidence of the damage the novel coronavirus was wreaking on the world economy soured risk sentiment, unravelling a chunk of their recent gains.
The Aussie had backtracked to $0.6289 <AUD=D3>, having fallen 1.9% overnight and away from a five-week top of $0.6445. Chart support now lies in the $0.6215/45 zone.
The kiwi dollar retreated to $0.5961 <NZD=D3>, after shedding 1.8% overnight and leaving behind a peak of $0.6131. Support lies around $0.5920 and $0.5844.
The relapse came after U.S. data showed a record drop in retail sales for March and the sharpest decline in industrial output in 70 years. [nL2N2C227V]
The figures underlined just how much damage had already been done by the virus, tempering optimism that a slowdown in infections could allow some countries to steadily re-open.
Domestic data caused some confusion as Australian employment was reported to have risen 5,900 in March, when analysts had tipped a fall of 40,000. [nL3N2C40O0] [nS9N2BQ006]
The Aussie initially rose on the news but turned tail when it became clear the data covered only the first two weeks of March, before the anti-virus lockdown really took effect.
"As such, these figures are likely to deteriorate sharply in April where we expect a large rise in unemployment, which we forecast to reach 11.75% by mid-year," said Kaixin Owyong, an economist at NAB.
"Widespread reports of workers being stood down and hours being cut as businesses grapple with a sharp pullback in demand for their goods and services should result in a collapse in hours worked and a rise in underemployment."
Investors clearly expected worse to come with three-year bond futures <YTTc1> up 1.5 ticks at 99.740, while the 10-year contract <YTCc1> rose 6 ticks to 99.1550.
Demand for bonds remains strong even as the government ramps up borrowing to fund massive fiscal stimulus programmes.
A record A$13 billion of new 2024 paper was sold on Wednesday, drawing bids worth A$25.8 billion.
Domestic buyers bought 68% of the offer, with the rest going offshore. Banks took just over half the issue and fund managers a quarter. Foreign central banks took 5.4%.
Across the Tasman, the kiwi took an extra knock when the head of the Reserve Bank of New Zealand said it could ease policy further and even shift to negative interest rates if necessary. [nL3N2C40AK]
(Editing by Subhranshu Sahu)
