Thursday January 29, 2015 - 23:58:34 GMT
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Reuters - www.reuters.com
FOREX-Commodity currencies feel heat as G3 consolidate
* Dollar-bloc currencies fall to fresh multi-year lows
* Aussie hit hard as market eyes imminent rate cut
* Swiss franc also under pressure
* G3 currencies consolidating after recent big moves
By Ian Chua
SYDNEY, Jan 30 (Reuters) - Dollar-bloc currencies nursed hefty losses early on Friday, following a selloff that saw the Australian dollar slump to its lowest in over five years as investors wagered on an interest rate cut by the Reserve Bank of Australia.
The Aussie dollar fell to $0.7720, reaching a low not seen since July 2009. It last traded at $0.7757, having suffered a drop of nearly 2 percent on Thursday.
"The AUD's fall over the past 24 hours has been nothing short of stunning," said Raiko Shareef, currency strategist at Bank of New Zealand.
"The weight of expectation around next week's RBA meeting continues to mount, such that a nasty snapback beckons should the RBA fail to adjust its language toward an easing bias."
Debt futures now imply a near 70 percent chance the Reserve Bank of Australia (RBA) will cut its 2.5 percent cash rate at its policy meeting on Tuesday, Feb. 3, up from less than 10 percent earlier this week.
The decisive move came as the Reserve Bank of New Zealand on Thursday surprised investors by opening the door to a possible rate cut, following last week's unexpected decision by the Bank of Canada to ease.
Those decisions have taken a heavy toll on the Canadian and New Zealand currencies as well. The greenback hit a near six-year high on the Canadian dollar at C$1.2678, while the New Zealand dollar slid to a four-year trough of $0.7235 .
Another notable underperformer was the Swiss franc, which eased broadly on renewed speculation of intervention by the Swiss National Bank.
The euro climbed as far as 1.0464 francs, reaching its highest since the Swiss National Bank abandoned its 1.20 per euro cap two weeks ago. It last traded at 1.0452.
The G3 currencies were far more sedate by comparison with the embattled euro firming slightly as it consolidated steep losses that knocked it to an 11-year low against the greenback first thing this week.
The common currency edged up to $1.1318, pulling away from the trough of $1.1098. Against the yen, it drifted to 133.95, away from a 16-month low of 130.16 set Monday.
Investors also bought the U.S. dollar against the yen, driving it back toward the top end of its 117.00-119.00 range. The dollar fetched 118.28 yen, rebounding from Thursday's low of 117.25.
The market will be hard pressed to find anything too inspiring in Friday's offering of Asian economic data .
In Europe, euro zone inflation could come in softer than expected after German consumer prices fell in January for the first time since the height of the global financial crisis in 2009.
Such an outcome is sure to vindicate the European Central Bank's decision last week to launch a 1 trillion euro government bond-buying programme. (Editing by G Crosse)
© Thomson Reuters 2015. All rights reserved
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