Australian dollar hits 7-month low, kiwi just above a 19-month trough

Sydney, Australia - The Australian dollar reached a seven-month low on Thursday as the US dollar made a strong comeback, threatening to push the Aussie through a crucial support level and extend its decline. Meanwhile, the New Zealand kiwi was seen hovering near a 19-month trough. The Aussie dropped 0.1% to $0.6838, its lowest since March, after declining 0.3% the previous day.

It is now hovering above support at $0.6834, and a decisive break could drive it to levels not seen since January. Meanwhile, the kiwi dollar remained steady at $0.5569 after falling 0.8% on Wednesday, leaving it in close proximity to its 19-month low of $0.5529. Near-term resistance is near $0.5650.

The Australian dollar's weakness appears to be exacerbated by the broader market sell-off, with Nvidia's board meeting on Wednesday to consider whether to remove CEO Jensen Huang. Nvidia shares plunged 8% in after-hours trading. Strategist Imre Speizer of Westpac noted that momentum has shifted to the downside, citing the Reserve Bank of Australia's more cautious stance and market pricing suggesting a potential end to the economic cycle as factors weighing down the market.

In the broader forex markets, the US dollar was near a 19-month peak, as traders bet that the Federal Reserve might raise interest rates by 50 basis points in the upcoming month to combat inflation. Currently, inflation stands at 10%. The RBA is expected to maintain interest rates at their highest level in 18 years, at 4.85%, until the second half of 2027 when rate cuts are anticipated.

Meanwhile, the Reserve Bank of New Zealand is widely expected to raise interest rates by a quarter-point in December to 3%, with two further hikes likely by the end of the following year.