FX.co ★ Australian, NZ Dollars Lower As Hot Inflation Data Fuels Fed Rate Hike Concerns

The Australian and NZ dollars depreciated against their major counterparts in the Asian session on Thursday amid rising risk aversion, as strong U.S. inflation data sparked worries about aggressive interest rate hikes and its impact on economic growth.

Overnight data showed that U.S. inflation eased less than expected in April, raising expectations for a 50 basis point hike at the Fed's meetings in June, July and September.

U.S. stock markets closed in the red on concerns that the Fed will tighten monetary policy aggressively to bring inflation down.

Short term treasury yields rose, while long term counterparts fell as investors feared that faster policy tightening would hurt growth.

A stronger dollar pushed down commodity prices, weighing on riskier assets.

The aussie weakened to near a 2-year low of 0.6873 against the greenback and more than a 3-month low of 0.8957 against the loonie, off its early highs of 0.6953 and 0.9024, respectively. The next possible support for the aussie is seen around 0.88 against the greenback and 0.67 against the loonie.

Pulling back from its prior highs of 90.31 against the yen and 1.5140 against the euro, the aussie slipped to near 2-month lows of 89.04 and 1.5279, respectively. The aussie may locate support around 86.00 against the yen and 1.56 against the euro.

The aussie eased off to 1.1018 against the kiwi, following a high of 1.1054 seen at 11:45 pm ET. It has touched a 2-day low of 1.1010 earlier in the session. On the downside, 1.09 is possibly seen as its next support level.

The kiwi dropped to near a 2-year low of 0.6237 against the greenback, near 2-month low of 80.80 against the yen and near a 3-month low of 1.6841 against the euro, down from its prior highs of 0.6298, 81.84 and 1.6675, respectively. The kiwi is likely to challenge support near 0.60 against the greenback, 78.00 against the yen and 1.72 against the euro.

The greenback got a boost and firmed to a 2-year high of 1.2184 against the pound. Next key resistance for the greenback is seen around the 1.20 level.

The greenback touched a 6-day high of 1.0491 against the euro and a 2-day high of 0.9967 against the franc, following its previous lows of 1.0529 and 0.9930, respectively. The greenback is seen finding resistance around 1.03 against the euro and 1.02 against the franc.

The greenback rose to 1.3036 against the loonie, after falling to 1.2977 at 9:45 pm ET. If the greenback rises further, 1.32 is possibly seen as its next resistance level.

In contrast, the greenback weakened against the yen, hitting a 1-week low of 128.90. Immediate support for the dollar is likely seen near the 126.00 level.

Looking ahead, U.S. PPI for April and the U.S. weekly jobless claims for the week ended May 7 will be featured in the New York session.