By Stella Qiu
SYDNEY, May 10 (Reuters) - The Australian and New
Zealand dollars held tight ranges ahead of U.S. inflation data
on Wednesday as traders tempered expectations Fed rates may have
peaked and worries about debt ceiling negotiations in Washington
capped confidence.
The Aussie was little changed at $0.6762, having
eased 0.3% overnight to as low as $0.6747, as the greenback
edged higher amid jitters about U.S. debt ceiling negotiations
and share markets taking a turn for the worse. It faces resistance at a three-week high of $0.6804 touched
just two days ago and has support at the 200-day moving average
of $0.6727.
The kiwi dollar was changing hands at $0.6337,
having also slipped 0.2% to as low as $0.6319. Resistance is
tipped at $0.6358, while major support lies at $0.6160.
Markets are on tenterhooks for the U.S. inflation data later
on Wednesday after a strong payrolls report last week delivered
a setback to near-term hopes of Federal Reserve easing.
Economists see inflation remaining sticky, forecasting a rise of
0.4% in April for both the headline and core CPI.
Fed funds futures are pricing in the peak for rates while
seeing cuts of 60 basis points by the year-end. "Stronger than expected CPI is very negative for risky
assets as it boxes the Fed in, creating a trifecta conflict,
between inflation concerns, slowing growth, and the need to
address banking sector woes," said Alan Ruskin, chief
international strategist at Deutsche Bank.
"Conversely, softer than expected core CPI, is very positive
for risk, and high beta commodity currencies like Aussie, Kiwi
and CAD in G10."
The Australian government on Tuesday announced the first
budget surplus in 15 years, allowing it to deliver some cost of
living relief to low-income families, a move that markets took
in stride.
George Tharenou, chief economist at UBS, said the overall
stance of the budget outlook is still stimulatory, adding there
is an increasing risk the Reserve Bank of Australia will raise
rates again, most likely in July.
"Further out, more definitive is we also now think the RBA
is unlikely to cut the cash rate this year," said Tharenou.
The government is planning to sell around A$75 billion ($51
billion) of Treasury bonds in the year to June 2024, compared
with around A$80 billion for the current 2022/23 year.
(Reporting by Stella Qiu; Editing by Sam Holmes)
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.