SYDNEY, July 8 Reuters The Australian and New Zealand dollars were under pressure on Thursday as a bout of global risk aversion hit equities and lowered bond yields, while a further lockdown in Sydney challenged the domestic economic outlook.
The Aussie slipped 0.3 to 0.7462 and was a long way from the weeks top of 0.7599. It was now threatening the recent sevenmonth low of 0.7445 and a break would risk a much deeper retreat to 0.7350 and lower.
The kiwi dollar dropped 0.4 to 0.6989 and further away from the peak of 0.7104 hit early in the week. Support lies at 0.6947 and the recent trough of 0.6923.
The Aussie was not helped by news the lockdown in Sydney would be extended to a third week as the outbreak of the Delta variant showed no sign of slowing.
The disruption to the economy only underlined the need for continued stimulus from the Reserve Bank of Australia RBA, with Governor Philip Lowe again emphasising that interest rates were not likely to rise until 2024.
Asked why markets were pricing in a hike as early as October next year, Lowe said they might not properly understand the banks reaction function.
The RBA was determined to get inflation back into its 23 target band and that would take a sustainable lift in wages growth above 3, something not seen in a decade.
The emphasis on wages means the RBA is likely to lag other central banks in tightening despite the fasterthanexpected recovery in activity and employment, said NAB economist Taylor Nugent.