Australia and New Zealand dlrs hit by U.S. capital tax doubling plan


Band Swati Pandey

SYDNEY, April 23 (Reuters)Australian dollar AUD = D3 encountered technical resistance on Friday to drop to its lowest level in a week, as reports that US President Joe Biden planned to nearly double the capital gains tax of wealthy Americans hit appetites for the risk.

Australian dollar AUD = D4 fell to $ 0.7693, a level not seen since April 14 as investors frightened by the prospect of a tax hike turned to safe-haven assets such as the U.S. dollar, Japanese yen and bonds of the Treasure.

The Aussie, which is often traded as a liquid indicator of risk, is down 0.2% this week so far after two consecutive weekly gains. It was last listed at $ 0.7717.

“US stocks fell as the AUD lost ground after Biden announced plans to double capital gains tax for people with incomes over $ 1 million,” said Steven Dooley, strategist in foreign currency for Western Union Business Solutions.

“The plans, widely discussed during the campaign, could have a significant impact on the timing and tax implications of stock transactions,” Dooley added.

The New Zealand dollar NZD = D4 losses extended from Thursday after the government announced plans to regulate bank lending standards, traditionally the domain of the Reserve Bank of New Zealand (RBNZ).

The kiwi fell to $ 0.7151, a level not seen since April 19. For the week, the kiwi is slightly higher, on track for its fourth consecutive weekly increase.

Next week, investors will be watching first quarter consumer price data in Australia, which is expected to show inflation still below the country’s central bank target of 2-3% despite strong measures. monetary and fiscal stimulus.

New Zealand government bonds 0 # NZTSY = eased, pushing yields up around 2-3 basis points across the curve.

Australian government bond futures also slipped, with the three-year bond contract YTTc1 down 2.5 ticks to 99.705. The 10-year contract YTCc1 was down 3.5 ticks to 98.31.

(Edited by Karishma Singh)

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