The Australian and New Zealand dollars were on a steadier footing on Monday, but the antipodean currencies remained vulnerable to domestic factors including from monetary policy and a raft of economic data. The Australian dollar rose to $0.7834, from Friday's low of $0.7789, inching closer to key chart resistance around $0.7840 and $0.7875.
The Aussie hovered near a one-month high against the yen at 93.25, having gained 0.7 percent on Friday. The Aussie, however, remains vulnerable to falling interest rates at home and a large build up in bearish positions.
Data from the Commodity Futures Trading Commission showed net short positions in the Aussie edging up to 53,831 the week of February 17 as investors price in a follow-up rate cut by the Reserve Bank of Australia (RBA). Markets give an around 50-50 chance of an easing to 2.00 percent in March, and are fully priced for a move by May.
"I think we'll have to wait until the end of March to really see a break one way or the other," said Dino Spinelli, head of FX sales at UBS in Sydney. He forecasts the Aussie between 76 and 79 cents until the market gets more clarity around when the RBA may cut again. Market attention is on Federal Reserve Chair Janet Yellen's testimony on Tuesday for any hints about when the US central bank may begin raising rates.
The New Zealand dollar was trading sideways around $0.7525, as selling of the kiwi against the neighbouring Aussie dollar weighed in a quiet start to the week. The kiwi, which hit a four-week high of $0.7574 last week, was looking for new impetus which might come from Yellen.
It was seen trading between support at $0.7500 and $0.7485, with sellers emerging at $0.7560. The kiwi was softer against the Aussie, which pushed to NZ$1.0415 as the Aussie moved further away from a record low around NZ$1.0290 hit last Thursday. "The strong reversion after Thursday's new post-float high indicates reluctance to drive this cross too much further at this stage," ANZ analysts said in a note.
Local event risk this week includes a possible update from dairy giant Fonterra on its forecast farmer payout, along with business sentiment surveys, and trade and building data. New Zealand government bonds were a touch softer, pushing yields a tick higher along the curve. Australian government bond futures eased slightly, with the three-year bond contract off 1 tick at 98.140. The 10-year contract shed half a tick to 97.4650.
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