The Australian dollar hit a new 3-year peak against the pound on Friday as sterling took a beating amid fears of a “hard-Brexit” departure from the European Union. The pound was down 1.3 percent against the Aussie at A$1.6417. Sterling seized centre stage in early Asian trading, plunging to three-decade lows as a break of key technical support levels triggered a wave of stop-loss orders.
Earlier, the pound suddenly dropped 10 percent from levels around $1.2600 to $1.1378 versus the U.S dollar on some trading platforms, but bounced back to levels around $1.2500. After some choppy moves afterwards, the pound was last trading at $1.2432 , still down 1.5 percent on the day.
The Australian dollar edged 0.1 percent lower to $0.7576, near two-week lows as the greenback gained on the back of encouraging data, bolstering expectations of a Federal Reserve rate hike this year.
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If the falls are sustained, it would be the Aussie’s worst weekly performance since July 22, as investors shift focus to the Fed.
First-time filings for U.S. jobless benefits unexpectedly fell to a near 43-year low, the U.S. Labor Department said. That lifted the dollar to a 2-month high.
“It’s not really about the Aussie dollar at all. It’s about the moves in the U.S. dollar, better U.S. data, increased expectations of a December Fed rate hike,” said Greg McKenna, chief market analyst at AxiTrader.
The U.S. payrolls report is due later in the day and is expected to show 175,000 jobs were added last month.
Domestic data this week showed a rosy picture of Australia’s economy, boosting expectations for gross domestic product growth of more than 3 percent for the year.
However, a resilient Aussie, up about 4 percent this year, could spoil the party. It fell nearly 11 percent in 2015 and more than 8 percent the year before.
“The external sector has recently been supported by earlier falls in the Australian dollar, but the more recent strengthening means this support may not last,” said Kate Hickie at Capital Economics.
Elsewhere, the Aussie stood tall against its New Zealand cousin, rising 0.5 percent to stay near a two-month high.
The New Zealand dollar fell for a fifth straight session to a fresh two-month low on Friday. It slipped below key chart support of $0.7200 to trade down 0.3 percent.
The kiwi is also on track for its worst weekly performance in two months.
New Zealand government bonds eased across most of the curve, following U.S. Treasuries. Yields were 3 basis points higher at the long end but fell 0.5 basis points at the short end.
Australian government bond futures slipped too, with the three-year bond contract down 2 ticks at 98.40. The 10-year contract down 1 tick to 97.86.