Australian, NZ Dollars Decline Amid Rising Risk Aversion

The Australian and NZ dollars fell against their major counterparts in the Asian session on Thursday amid rising risk aversion, as strong ISM manufacturing data and hawkish Fed speeches sparked speculation that the central bank may need to stick with aggressive policy tightening to control price pressures.

San Francisco Fed President Mary Daly said on Wednesday that the central bank should tame inflation rapidly with aggressive rate hikes. Daly added that she expects half-point interest rate hikes in the next couple of meetings and take rates to 2.5 percent quickly.

St. Louis Federal Reserve Bank President James Bullard said that the current U.S. macroeconomic situation is straining the central bank's credibility with respect to its inflation target.

Traders are now assigning a 60 percent possibility for another 50 basis point hike in September.

Asian stock markets are mostly lower, following the broadly negative cues overnight from Wall Street, as JPMorgan Chase CEO Jamie Dimon urged investors to brace for an economic hurricane.

The aussie dropped to a 6-day low of 0.7141 against the greenback and a 2-day low of 0.9059 against the loonie, down from its prior highs of 0.7178 and 0.9089, respectively. The next possible support for the aussie is seen around 0.68 against the greenback and 0.88 against the loonie.

The Australian currency eased off to 1.1053 against the kiwi, from more than a 2-week high of 1.1078 hit at 9:45 pm ET. The aussie may locate support around the 1.075 level.

Retreating from its previous highs of 93.44 against the yen and 1.4824 against the euro, the aussie edged down to 92.84 and 1.4918, respectively. If the aussie continues its fall, 90.00 and 1.52 are possibly seen as its next support levels against the yen and the euro, respectively.

The kiwi weakened to 83.99 against the yen and 1.6490 against the euro, after rising to 84.43 and 1.6407, respectively in early deals. The kiwi is poised to challenge support around 79.00 against the yen and 1.66 against the euro.

The kiwi slipped to a 1-week low of 0.6460 against the greenback, from a high of 0.6488 seen at 8:15 pm ET. Next key support for the kiwi is likely seen around the 0.62 level.

Looking ahead, Eurozone PPI for April is due in the European session.

U.S. ADP private payrolls data for May is scheduled for release at 8:15 am ET.

Canada building permits for April, U.S. weekly jobless claims for the week ended May 28 and factory orders for April will be released in the New York session.