SYDNEY, Dec 16 (Reuters) - The Australian and New Zealand dollars nursed heavy losses on Friday after a slew of rate hikes and hawkish comments from global central banks heightened fears of an impending recession next year.
The Aussie was hanging at $0.6700 after diving 2.4% overnight - the biggest fall since March 2020 - to as far as $0.6677. Bulls had hoped it would breach the 200-day moving average of 69 cents after the softer U.S. inflation data gave the risk-sensitive currency a leg up to $0.6893.
It was set to end the week flat.
The kiwi dollar was hovering at $0.6336, having also plunged 1.8% overnight to as low as $0.6321. That helped erase all of the gains in the week, while having support around $0.6320.
Both took a heavy knock after risk aversion prevailed overnight, following an action-packed week full of data and central bank rate decisions. European Central Bank on Thursday joined the Bank of England and the Federal Reserve to pledge more tightening is needed to fight inflation, a more hawkish stance than markets had hoped for.
"The question on everyone's lips as we close out 2022 is whether 2023 will bring recessions to the world's major economies. The answer, in our view, is 'yes'," said Neil Shearing, group chief economist, at Capital Economics.
"Our proprietary indicator now suggest there is a 90% probability that the U.S. will be in recession in six months' time."
Ray Attrill, head of FX strategy at NAB, said after a rise of more than 10% in the past two months for the Aussie dollar, some consolidation was in order before a fresh move up to the $0.75 area next year.
"If China's move towards a living with COVID state of affairs succeeds and USD depreciation proceeds apace, 0.75 is a realistic target (for the next 6-12 months)," said Attrill.
Australian government yields were up on the week. The yield on Australian 10-year government bonds jumped 17 basis points to be 3.468%, while three-year yields rose 16 bps to 3.179%. (Reporting by Stella Qiu; Editing by Stephen Coates)
