Aussie and New Zealand $ subdued

The Australian and New Zealand dollars were subdued on Monday against a broadly firmer greenback in thin year-end trade, with the Aussie pinned near nine-year lows against its kiwi cousin. The Aussie was steady at $0.8123, having drifted in a slim $0.8110/27 range, not far from last week's low of $0.8087. A break there could open the way to the May 2010 trough of $0.8066.
Steven Daghlian, a market analyst at Commonwealth Bank of Australia, expects the Aussie to hover around its current levels near 81 cents through the holiday season, when trading volumes are low.
The Aussie has shed nearly 9 percent against the US dollar so far this year, dragged down by falling global commodity prices and sub-par economic growth at home.
Prices of iron ore, Australia's top export, have tumbled 50 percent this year and there's been a sharp reduction in mining investment in the country.
Debt futures implied a one-in-four chance of a cut to the 2.5 percent cash rate at the next central bank policy review in February and were fully priced for a quarter point easing by May.
The New Zealand dollar too has felt the heat from lower commodity prices, especially dairy, amid signs that strong domestic growth has peaked.
The kiwi was pressured at $0.7756, not far from last week's low of $0.7694. Near-term support was seen at $0.7700, which has held in the past two weeks. The kiwi touched a 2-1/2-year low of $0.7609
earlier this month, and a break below would open the door to a test of the key $0.7500 level.
For the year, the kiwi has lost nearly 6 percent, but it has managed to outperform its Aussie cousin due to diverging interest rate outlooks between New Zealand and Australia.
The Aussie plunged to NZ$1.0434 late last week, its lowest since 2006. It was last at NZ$1.0444 and a break below NZ$1.0421 would take it to a post-float low.
New Zealand government bonds were largely unchanged, putting the yield on 10-year notes at 3.75 percent, near a 1-1/2-year low of 3.695 percent hit earlier in the month.
Australian government bond futures were also quiet, with the three-year bond contract steady at 97.770. The 10-year contract was up 1 tick at 97.1100.