The Australian and New Zealand dollars clawed their way back from the depths on Monday after a rise in Asian bourses and a soft yen lifted risk sentiment. The Aussie inched up to $0.9600, from a trough of $0.9572 on Friday, underpinned by a 1 percent increase in stock markets in Japan and Australia. But it was still a fair way off a five-month peak of $0.9758 set last week on expectations the US Federal Reserve will extend its cheap money policies into next year.
Traders cited sellers around $0.9620 with immediate support near $0.9580. Investors are turning their attention back to China as Beijing attempts to cool property prices and inflation. The New Zealand dollar edged up to $0.8298, from a three-week trough of $0.8272, with trading thinned by a public holiday in New Zealand. The kiwi climbed as far as $0.8544 last week, its highest since early May.
On a trade-weighted basis, the kiwi fell to one-month lows of 76.40 as investors booked profits following recent hefty gains. The kiwi has gained five cents in two months, with immediate chart resistance at $0.8350. Signs of tightening in China could hurt demand for commodities, particularly iron and ore, Australia's largest export earner. "The Aussie is looking supported with the proviso that we don't see anything surprising out of China in the near term," said Gregg Gibbs, a strategist at Royal Bank of Scotland, seeing the Aussie edging higher.
The market is still wagering the Reserve Bank of Australia (RBA) has concluded its easing cycle, with swap markets pricing in 4 basis points of tightening on a one-year horizon. Australian government bond futures eased with the three-year bond contract down 2 ticks to 96.950, pulling closer to 97.01, the 61.8 percent retracement of the 96.74-97.18 fall. The 10-year contract lost 2.5 ticks to 96.045.
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