The Australian and New Zealand dollars hovered near multi-month lows against the euro and struggled to make friends versus their US counterpart, with investors awaiting developments in Washington. The euro rose to A$1.5034, not far from an eight-month peak of A$1.5074 touched last week. Against the New Zealand dollar, it stood at NZ$1.6130, having touched a one-year peak of NZ$1.6235 on Friday.
The common currency is benefiting from a safe-haven flow due to political tumult in Washington and improving economic data. With so much attention on the euro, the Aussie dollar took a back seat against its US counterpart. It stood at $0.7440, not far from last week's peak of $0.7458.
The New Zealand dollar remained largely flat on Monday, hovering around $0.6920 but away from Friday's low of $0.6882. The main local event investors anticipate this week is the New Zealand government budget, due on Thursday. Strong tax revenue and slower-than-anticipated earthquake recovery spending was expected to contribute to a surplus significantly higher than the NZ$473 million ($327.51 million)forecast by the government in December.
New Zealand government bonds eased, sending yields 1 basis point higher at the long end of the curve. Australian government bond futures were also soft, with the three-year bond contract off 1 tick at 98.220. The 10-year contract edged down 2.5 ticks to 97.4750, while the 20-year contract was steady at 96.8900. The spread between Australian and US government bonds shrunk to 35 basis points, a whisker away from the smallest margin of 34 basis points touched in 2001.
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