SYDNEY/WELLINGTON: The Australian and New Zealand dollars traded with a heavy tone on Monday and looked vulnerable amid persistent concerns about the health of China's economy. The market, though, was generally subdued as investors waited for concrete monetary policy action in Europe and the United States. The Aussie dollar skidded to one-month lows at$1.0372, having broken through major support around $1.0420 following a sell order from a UK account, according to a trader.
It last fetched $1.0385, with immediate resistance found at $1.0435, the session's high. Support was seen at $1.0372. "The Aussie is finding it difficult to make any progress and has lost momentum since it peaked at $1.0600," a trader at a European bank in Singapore said. The local dollar has shed more than 2 percent since it rose to $1.0615 earlier this month, its highest since March and charts indicate more downside ahead. The 5, 10 and 20-day MA are all pointing south.
The New Zealand dollar nudged lower to $0.8100, versus $0.8117 in late New York trade on Friday, pulling further away from a two-week high of $0.8187 touched late last week. "The rising sense that major central bank liquidity developments will be announced in September...will hold into the weekend at least," said Westpac senior strategist Imre Speizer. "This should support the kiwi within the $0.8050 to $0.8200 trading range that we have been in for much of August." In addition, the latest IMM positioning data showed speculators continue to increase bets the Aussie and kiwi will rise, pushing net positions closer to historically high levels.
A hefty build-up in such positions raises the risk of a dramatic sell-off if speculators rapidly reverse bets to buy, but analysts argue that both currencies have avoided big falls in recent months even when positioning has shifted dramatically from net long to net short. The Antipodeans also lost ground against the euro and were hovering near seven-week lows. The common currency rose 0.3 percent on the day to A$1.2033.
"The euro continues to hold quite well and looks set for more gains," a trader said. The euro has put on 2.5 percent so far in August, the largest monthly gain since March, underpinned by a massive unwinding of bearish euro bets, even though there has been no new concrete development on a European debt rescue plan.
The next big level for the euro is A$1.2140. New Zealand government bonds took on a mild bid tone, sending bond yields a tick lower. Australian government bonds rose to multi-week highs with the three-year contract climbing to 97.370, its highest since Aug 6. The 10-year contract edged up to 96.860, very close to a two-week peak.
