SYDNEY/WELLINGTON: The Australian and New Zealand dollars struggled to find any friends on Monday against a resurgent US dollar which hit a 4-1/2-year high against the yen, with investors awaiting key data from China. The Aussie slipped to $0.9984, from $1.0005 early, having broken parity on Friday for the first time in 11 months to hit a trough of $0.9961. It tumbled 2.9 percent last week, its biggest weekly decline in 18 months. The Antipodean currencies were dragged lower by a sharp slide in the yen versus the US on signs of an improving US economic landscape. The yen's breach of the psychological and technical level of 100 to the dollar suggests further weakness as the Bank of Japan undertakes its $1.4 trillion bond buying plan in earnest. That is in a sharp contrast with the United States where speculation is growing the Federal Reserve could scale back its aggressive stimulus programme sooner than expected. Joseph Capurso, a strategist at Commonwealth Bank of Australia, played down the talk of the Fed winding down the bond-buying plan, but sees the Aussie slipping as low as $0.9850 as the US dollar's rally has a bit more to go. Charts also suggest further Aussie downside with 5-, 10- and 20-day moving averages pointing south. However, Capurso is confident the Aussie will rebound perhaps as early as late this week, in part because he said markets have priced in too much easing in Australia. Investors give a one-in-five chance of a follow-up rate cut in June to 2.5 percent, while interbank futures are fully priced for an easing by October. The Reserve Bank of Australia cut rates to a record low of 2.75 percent last week, citing lower inflation forecasts and the likelihood of subpar growth into next year. Key Aussie support was found at $0.9961, then $0.9920 with traders citing stops below $0.9950. Resistance was found at Friday's high of $1.0100. Investors were now focused on key Chinese data at 0530 GMT, including industrial output and retail sales. Capurso said the Aussie would need a very strong reading to stage a turnaround. Australia and New Zealand are very sensitive to news out of China, their top export market. Indeed, the Aussie dollar hardly took notice of a sharp rise in Australian housing finance with home loan commitments jumping 5.2 percent in March, far exceeding forecasts of a 3.5 percent increase. A Temporary Kiwi Correction The New Zealand dollar slipped 0.4 percent to $0.8275, sticking close to a near-two-month low of $0.8259 hit late last week. Broad strength in the US dollar stole the kiwi's thunder as investors brushed off recent encouraging data in New Zealand. Economists and investors are wagering that the next interest rate move by the Reserve Bank of New Zealand (RBNZ) is up, albeit not for a while, a rarity among Western countries. That is one reason analysts don't see the current kiwi sell-off being sustained. "While the near-term outlook for NZD remains less bright as the USD comes back into the limelight, we don't expect the NZD to soften materially given the improving tone of local data and the likelihood of persistent interest rate advantage," ANZ analysts said in a note. They added that the kiwi would likely trade in an $0.8200-$0.8400 range. The Antipodean currencies also held near multi-month lows against the euro, pound and Canadian dollars, but managed to trim recent losses against the yen. New Zealand government bonds fell, sending yields around 7 basis points higher at the long end of the curve. Australian government bond futures were off six-month highs with the three-year contract 0.01 point higher at 97.380. The 10-year contract eased 0.025 point to 96.740. Australia will release its annual government budget on Tuesday ahead of New Zealand on Thursday.

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