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Australia, NZ dollars sag on commodities; China data fails to support

Published 08/05/2017, 02:05 pm
Updated 08/05/2017, 02:10 pm
© Reuters.  Australia, NZ dollars sag on commodities; China data fails to support
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By Cecile Lefort and Charlotte Greenfield

SYDNEY/WELLINGTON, May 8 (Reuters) - The Australian and New Zealand dollars languished near multi-month lows on Monday as falling commodity prices and euro strength eclipsed upbeat Chinese trade data.

The Australian dollar AUD=D4 slipped to $0.7398, from $0.7413 late on Friday, pulling closer to a four-month trough of $0.7328 touched last week. Immediate support was found around $0.7383.

The Aussie slipped 1 percent last week in the third consecutive week of decline, having dropped around four cents since a peak in late March.

Even strong trade data from China, Australia's top export market, combined with a 1.4 percent rise in Australian jobs ads in April and improving local business confidence and conditions failed to reverse sentiment. IDnS9N1CA05A ID:nS9N1G8005 ID:nZZN070401

Instead, investors focused on a surprise 13.4 percent drop in Australian building approvals in March, against forecasts of a 4 percent fall. ID:nS9N1HD02D

Lower prices for iron ore DCIOcv1 , Australia's biggest export earner, along with broad euro strength following the election of Emmanuel Macron as France's president, weighed on the Aussie.

The euro stood near an eight-month peak of A$1.4909 EURAUD=R , having bounced 12 cents since February. It last traded at A$1.4831.

The pound hovered near its highest since September at A$1.7511 GBPAUD=R and near a one-year peak of NZ$1.8732 GBPNZD=R .

Australia's federal budget will be released on Tuesday, but the Aussie is unlikely to react much since most of the proposed measures have already been leaked to the press. ID:nL4N1I31SZ

The New Zealand dollar NZD=D4 edged down, still largely at the mercy of waning commodity prices even as strong local economic data provided support.

The Kiwi had risen to $0.6930 on Friday but eased over the weekend to $0.6915.

Investors had been encouraged by strong labour and global dairy price data the previous week as well as the prospect that the Reserve Bank of New Zealand (RBNZ) might take on a slightly more hawkish stance from its current neutral bias when it meets on Thursday.

None of this, however, was enough to bolster the Kiwi.

"With the weakness in commodity prices and the Fed hinting they're still on a path to hike in June, the headwinds proved too strong," said Kiwibank economists in a research note.

New Zealand government bonds 0#NZTSY= eased, sending yields 0.5 basis points higher along the curve.

Australian government bond futures slipped to one-month lows, with the three-year bond contract YTTc1 off 3 ticks at 98.070. The 10-year contract YTCc1 also fell 3 ticks to 97.2950, while the 20-year contract YXXc1 dropped 2.5 ticks to 96.7200. (Editing by Jacqueline Wong)

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