By Swati Pandey and Charlotte Greenfield
SYDNEY/WELLINGTON, June 18 (Reuters) - The Australian and New Zealand dollars softened to multi-month lows on Monday on a resurgent greenback and amid worries of a U.S.-China trade war after the two countries slapped tariffs on each other's imports.
A global trade war will be particularly bad for export-heavy and commodity-dependent economies of Australia and New Zealand.
In addition, China is a top buyer of Australian iron ore and coal so a slowdown in demand would have a direct impact on the latter's economic fortunes.
The concerns took the Australian dollar AUD=D4 as low as $0.7426, a level not seen since early May.
The currency fell more than 2.1 percent last week, its worst weekly performance since early February. It was last up 0.1 percent at $0.7446.
The New Zealand dollar NZD=D4 made a three-week trough of $0.6920 and was last down 0.1 percent at $0.6942.
The kiwi eased 1.1 percent last week, its poorest showing since a 1.8 percent drop in late April.
Trump announced hefty tariffs on $50 billion of Chinese imports on Friday, laying out a list of more than 800 strategically important imports from China that would be subject to a 25 percent tariff starting July 6, including cars. said it would respond with tariffs "of the same scale and strength" and that any previous trade deals with Trump were "invalid." retaliation list expanded more than six-fold from a version released in April, but the value was kept at $50 billion, as some high-value items such as commercial aircraft were deleted.
"Increased trade tensions added to the push lower in the AUD, while the USD was supported despite its economy being in the direct firing line of tariffs," economists at ANZ bank said in a note.
"With risk appetite fragile, the AUD is likely to remain on the defensive for now."
The U.S. dollar .DXY hovered near the highest since early November against a basket of major currencies aided by a hawkish Federal Reserve which last week raised rates for a second time this year and signalled further increases. contrast, the Australian central bank has clearly indicated that rates are on hold at a record low 1.50 percent for as long as the eye can see. Its New Zealand counterpart is also set to keep rates at 1.75 percent for a long time to come.
New Zealand government bonds 0#NZTSY= gained, sending yields 0.5 basis points lower towards the long end of the curve.
Australian government bond futures rose, with the three-year bond contract YTTc1 up 2 ticks at 97.87. The 10-year contract YTCc1 added 3.75 ticks to 97.330. (Editing by Kim Coghill)