By Wayne Cole
SYDNEY, June 17 (Reuters) - The Australian and New Zealand dollars huddled near multi-month lows on Monday after their U.S. counterpart got a lift from upbeat domestic data, a stark contrast to disappointing numbers out of major trading partner China.
The Aussie AUD=D3 was hanging on grimly at $0.6879 having skidded as far as $0.6862 on Friday, its lowest since the flash-crash of early January. It shed 1.6% last week as mixed economic news saw bonds yields hit an all-time trough.
The Aussie was hard pressed by the safe haven yen, breaking below major support around 75 yen AUDJPY= .
"This cross tends to be regarded as the weapon of choice on risk-off events and technically it now looks vulnerable to the downside," said Rodrigo Catril, a senior FX strategist at NAB.
"Ahead of the G20 meeting and with simmering tension in Middle East and Hong Kong, a lower AUD/JPY could be the trigger for a lower AUD/USD too."
The kiwi dollar NZD=D3 stood at $0.6505 after shedding 2.6% last week to a whisker above its May trough of $0.6482. A break there would take it to ground last visited in October 2018.
Both had fallen on Friday after Chinese data showed industrial output there had slowed to a 17-year low in May as the trade war with the United States took a toll. Aussie is often used as a liquid proxy for China risks given the Asian giant takes more than a third of Australia's exports.
The U.S. dollar also got a boost after retail sales figures proved much firmer than expected and nudged Treasury yields higher. The result led investors to pull back a little on expectations for rate cuts this year. Federal Reserve will announce its latest policy decision on Wednesday and markets had been wagering it would take a more dovish tack given slowing inflation and global trade risks.
The pullback in Fed expectations was echoed in Australia, with futures 0#YIB: trimming the probability of the Reserve Bank of Australia (RBA) cutting rates in July to 46%, from as much as 70% last week.
There were also signs the RBA's easing in early June was having the desired effect on the ailing housing market with auction clearance rates jumping and prices steadying over the last couple of weeks.
An end to the relentless losses and the resulting erosion of housing wealth could be a lifesaver for the economy if sustained. government bond futures eased in the wake of the data, with the three-year bond contract YTTc1 off 4.5 ticks at 99.01. The 10-year contract YTCc1 dipped 3.25 ticks to 98.5900. (Editing by Jacqueline Wong)