The New Zealand dollar skidded to a five-month trough on Monday on concerns the incoming Labour coalition would introduce curbs on immigration and foreign investment, while the Australian dollar slipped to 1-1/2 week lows. The New Zealand currency fell for a fifth straight day to $0.6941, a level not seen since May 22.
The kiwi has tumbled 5.4 percent since an inconclusive election on September 23 left the country's two major parties reliant on the nationalist New Zealand First to form government. NZ First leader Winston Peters ended the speculation last week when he announced he would back the Labour Party, which had been in opposition for the last decade.
Kiwi bulls have been inconsolable since, as the Labour-NZ First coalition represents an abrupt shift in the country's open door policy that has helped fuel strong economic growth in recent years. New Zealand markets are closed on Monday for a holiday.
Across the Tasman Sea, the Australian dollar slipped to $0.7805, the lowest since October 12. The Aussie has lost more than 3 percent since hitting a two-year high of $0.8124 last month. Most of those losses have come on the back of a resurgent greenback, which got a shot in the arm last week after the US Senate approved a budget blueprint for the 2018 fiscal year.
The Reserve Bank of Australia (RBA) has left rates at a record low 1.50 percent for more than a year and investors see the next move higher in the second half of 2018. Australian government bond futures edged lower, with the three-year bond contract down 1 tick at 97.840. The 10-year contract slipped 3.5 ticks to 97.1600.
Already, incoming prime minister Jacinda Ardern has put a roadblock on New Zealand's participation in the Trans-Pacific Partnership insisting she will push for changes to the agreement due to be finalised next month.