The Australian and New Zealand dollars slipped against the euro on Monday as the single currency got a boost from reports the European Central Bank was preparing the ground for a gradual phasing out of its aggressive stimulus measures. The euro rose for a fourth straight session to A$1.4183, a level not seen since February 2. Against the New Zealand dollar, it hit a 4-month peak of NZ$1.5453.
Some members of the ECB's governing council discussed the possibility of higher interest rates at last week's policy meeting, sources told Reuters, adding the discussion was brief and the suggestion did not receive broad support. After struggling against the Antipodean currencies since late last year, the euro smartly rebounded in March, to stand 2.4 percent and 4.9 percent stronger against the Aussie and the Kiwi respectively. The Aussie, however, did well against the greenback even as strong US jobs report cemented expectations of faster rate hikes by the Federal Reserve. The Australian dollar stood at $0.7549, after rising 0.5 percent on Friday.
The New Zealand dollar held at $0.6921, coming back up from a 10-week trough of $0.6890 hit last week. Burdened by weak dairy prices and soft economic data the currency lost 1.7 percent last week, before snapping a seven-session losing streak to nudge higher on Friday. New Zealand government bonds gained, sending yields three basis points lower.
Australian government bond futures rose, with the three-year bond contract up 2 ticks at 97.84. The 10-year contract climbed 3 ticks to 97.0225. US employers hired workers at a robust pace in February, beating expectations, and wages grinded higher. Fed fund futures showed investors pricing in more than a 90 percent chance of an increase in US overnight interest rates at its two-day policy meeting ending on Wednesday.
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