The Australian and New Zealand dollars eased again on Monday as concerns about global growth resurfaced, weighing on risk-sensitive assets including equities. The currencies were also dragged down by a broadly stronger US dollar after the Federal Reserve last week reaffirmed its plans to raise interest rates in December and beyond.
The Australian dollar hit a one-week trough of $0.7211, slipping from Friday's $0.7227. It went as high as $0.7303 on Thursday, a level not seen since late September but it failed to build on those gains. The New Zealand dollar was last at $0.6733, drifting further away from a more than three-month high of $0.6829 touched last week.
A run of disappointing data from China recently including falling producer inflation amid cooling domestic demand have hurt risk sentiment. Asian shares started the week in negative territory after a sell-off in Wall Street on Friday. New Zealand government bonds were barely changed. Australian government bond futures gained, with the three-year bond contract up 1.5 ticks at 97.825. The 10-year contract added 3.5 ticks to 97.265.
"The market will now turn its attention to the underlying fundamentals as well as the ongoing global geopolitical issues," said Nick Twidale, Sydney-based analyst at Rakuten Securities Australia. A heated Sino-US trade war is at the centre of investor focus with the leaders of the two countries set to meet later this month. Markets will also look out for any headlines from an Asia-Pacific leaders meeting in Singapore this week, which US President Donald Trump has decided to skip.
"Closer to home, Australian traders will be focussing on the key fundamentals of the wage price index and employment data for short term direction in the currency, although either are not expected to have much of an effect on current RBA thinking," Twidale added. The Reserve Bank of Australia (RBA) has kept rates at a record low 1.50 percent for more than two years now and has reiterated the need for policy to remain accommodative amid tepid inflation and spare labour market capacity.
Data due Wednesday is likely to show a welcome tick up in third-quarter annual wage price index to 2.3 percent from 2.1 percent in the prior three-month period. Still, that is unlikely to have a material effect on consumer spending or inflation. Separate data on Thursday will likely show an extended bumper run in employment that began last year. Other key catalysts for investors this week will be economic indicators from China, with data on industrial production and retail sales providing a fresh gauge of the health of the world's second-biggest economy. China is a top trading partner for both Australia and New Zealand so any slowdown there would be detrimental to their economies.