The Australian dollar slipped to fresh one-week lows on Monday, falling for a fifth session in a move that is likely to fuel its retreat from a two-month peak. Not helping the Aussie was persistent weakness in iron ore prices, which plumbed fresh lows on Friday amid worries about a supply glut. Iron ore is Australia's top export earner.
The Aussie last stood at $0.7716, down from $0.7745 late in New York on Friday. It fell as far as $0.7712 and was well off the two-month high of $0.7939 set last Tuesday.
Traders said Chevron's sale of its stake in Caltex Australia Ltd. for A$4.7 billion ($3.6 billion) - Asia's biggest block deal this year - might also have contributed to the Aussie's heavy tone.
"Naturally, there are some currency implications on these types of deals to be expected, and currency traders will likely start speculating how much of the impact of this news will hit the forex market," said Stephen Innes, Senior Trader, OANDA Asia Pacific.
The Aussie was also softer against the yen and euro, but managed to outperform its New Zealand peer. It drifted up to NZ$1.0241, from an all-time low near NZ$1.0200 plumbed late in New York on Friday. The New Zealand dollar shed 0.5 percent to $0.7525 and was now more than 2 percent lower from last week's two-month high of $0.7698.
It lost ground against the yen and euro and could face more losses if the latest sell-off in oil and other key commodities were to continue. A global dairy auction on Tuesday is the next key test for the kiwi, which could come under renewed pressure if dairy prices fall further. Dairy giant Fonterra has said it would offer more supply at the upcoming sale.
New Zealand government bonds rose, pushing yields 2.5 basis points lower across the curve.
Australian government bond futures rebounded from Friday's rout. The three-year bond contract climbed 3 ticks to 98.300. The 10-year contract put on 4.5 ticks to 97.6400, recouping about half of Friday's losses.
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