The Australian and New Zealand dollars hovered around 2-1/2 year lows against the greenback on Tuesday as investors feared an escalation in the Sino-US trade war. The currencies also skidded against the British pound which surged on hopes of a Brexit deal.
The Australian dollar held at $0.7121 after going as low as $0.7092 earlier in the day, a level not seen since early 2016. The Aussie, a proxy for Chinese assets, is now down almost 9 percent this year, putting it among the world's worst performing major currencies.
The New Zealand dollar traded at $0.6533 from a trough of $0.6513, also the lowest since early 2016. The antipodean currencies hit multi-year lows against the euro
after European Union's top negotiator said a deal with Brain could be expected in the next 6-8 weeks. That sent the pound sharply higher. Sterling climbed to its highest against the Aussie in 4-1/2 months. On the kiwi, it rose to a more than two-year top.
"All eyes this week will be on the showdown between China's Xi Jinping and Trump and the news coming out of their respective camps," said James Kniveton, currency strategist at Western Union Business Solutions.
President Donald Trump warned last week he was ready to slap tariffs on virtually all Chinese imports into the United States, threatening duties on another $267 billion of goods on top of $200 billion in imports primed for levies in coming days.