New Zealand hits multi-week lows, Aussie down

The New Zealand dollar skidded to multi-week lows on Monday on growing speculation of an interest rate cut in coming months, while the Australian dollar was dragged lower on China growth concerns despite Beijing's latest easing steps. The New Zealand dollar slumped to a five-week low of $0.7401 and a two-month trough on the yen, while sterling rose to NZ$2.0828, having gained six cents in three sessions.
The kiwi has tumbled 4.5 percent from a three-month high of $0.7744 hit two weeks ago. Support was found at $0.7350. The Australian dollar leapt 1.1 percent to a three-month peak of NZ$1.0695 following a hefty reversal in short positions by speculators. Data from the Commodity Futures Trading Commission showed Aussie net positions last week turned long for the first time since September. At the same time, it also showed a reduction in net kiwi longs.
http://graphics.thomsonreuters.com/Buzz/FX_Positioning.html Tim Kelleher, head of institutional FX sales at ASB Bank said a prediction from ANZ bank that the Reserve Bank of New Zealand (RBNZ) would cut rates in both June and July cranked up selling pressure on the kiwi. Also undermining was data showing spending on electronic cards slipped for the first time in months. New Zealand government bonds rose, sending yields as much as 8 basis points lower.
The Australian dollar eased to $0.7906, from $0.7940 late on Friday, having gained 1 percent last week. It came under pressure on growth concerns and deflationary pressures in China even as the People's Bank of China delivered another cut in interest rates on Sunday. "The market is reading the China rate cut as further belated confirmation of weakness in the economy," said Sean Callow, a senior currency strategist at Westpac. "It is welcome, but it's not exactly ahead of the game." The market often uses the Aussie as a liquid proxy to hedge against weakness, or wager on strength, in China.
The Aussie pulled back under 95 yen, while the red-hot pound was firm at A$1.9522, not far from a two-month peak of A$1.9664 set on Friday. Australian government bond futures were soft, with the three-year bond contract down 2 ticks at 97.900. The 10-year contract was flat at 97.1600. The premium paid by the Australian 2-year government bond over its US counterpart was at 1.49 percent, the widest gap since early January.