The Australian and New Zealand dollars were nursing heavy losses on Tuesday after a tumble in oil prices hit commodity currencies from Canada to South Africa. The Australian dollar fell to $0.7267, having shed nearly 1 percent overnight. It has skidded more than a full cent since reaching a four-month peak of $0.7386 on Friday. Support was found at $0.7245 and $0.7212.
Much of the damage came after crude oil futures plumbed their lowest in nearly six years. Commodity prices could fall further if a flood of Chinese data this week shows sluggish growth. "China's November international trade data will provide us an update on the demand side of the equation," said Tony Sycamore, a strategist at Commonwealth Bank of Australia.
Not helping the New Zealand dollar was growing speculation that the Reserve Bank of New Zealand (RBNZ) will cut interest rates when it meets on Thursday. Twenty-one out of 24 economists polled by Reuters expect the RBNZ to cut the official cash rate to 2.50 percent this week, while money markets imply around a 50 percent chance.
The kiwi dollar dropped to $0.6641, having slipped 1.6 percent overnight and away from a peak of $0.6787 set on Friday. Support was found at the $0.6600 level, analysts said. New Zealand government bonds gained, sending yields 3 basis points lower along the curve. Australian government bond futures bounced from multi-month lows in a bullish flattening of the curve. The three-year bond contract gained 4 ticks at 97.850, while the 10-year contract rose 8 ticks to 97.1000. The 20-year contract also added 8 ticks to 96.5850.