SYDNEY, July 21 Reuters The Australian and New Zealand dollars were testing their lows for the year on Wednesday as the inexorable spread of the Delta variant shut more of the Australian economy and undermined risk sentiment globally.
Technical forces had also turned decidedly bearish as major support levels gave way, encouraging shorting by black box and algorithmic funds that follow trends.
That left the Aussie wallowing at 0.7307 after diving as deep as 0.7300 overnight, its lowest since November last year. Chart support lies around 0.7255 and 0.7224 but it needs to get above 0.7410 to relieve the pressure.
The kiwi dollar fared little better at 0.6914, having buckled to an eightmonth trough of 0.6882 overnight following a break of support around 0.6920.
For the Aussie, the lower end of a threemonth down channel comes in at 0.7315 today, noted Richard Franulovich, Westpacs head of FX strategy.
Near term, the rising third wave of global case Covid casesheightened fear of the delta variant and the increasingly severe lockdowns across Australia, all point to the risks of an extension down towards 0.720025 over the next few weeks.
The dire impact of lockdowns was underlined on Wednesday by data showing retail sales slumped 1.8 in June, three times the fall expected by the market.
An even worse result was expected this month given more than half the population were now shut in, fuelling speculation the Reserve Bank of Australia RBA would have to reconsider its…