Australia, NZ dlrs weighed down by trade war worries

Australia, NZ dlrs weighed down by trade war worries

By Swati Pandey

SYDNEY, Sept 11 (Reuters) - 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 AUD=D4 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 NZD=D4 traded at $0.6533 from a trough of $0.6513, also the lowest since early 2016.

"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.

The moves would escalate Trump's trade war with Beijing over his demands for major changes in economic, trade and technology policy. China has threatened retaliation. the Aussie dollar trading somewhat as a proxy for Chinese growth, it will remain under pressure as long as we see the rhetoric between Beijing and Washington continue to be focused on the implementation of tariffs," Kniveton said.

"With August producing a new record in China's trade surplus with the U.S. it is unlikely we have seen the last of the Trump's comments on the issue," Kniveton added.

The antipodean currencies hit multi-year lows against the euro AUDEUR=R NZDEUR=R 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. climbed to its highest against the Aussie in 4-1/2 months AUDGBP= . On the kiwi, it rose to a more than two-year top NZDGBP= . (Editing by Kim Coghill)