WELLINGTON/SYDNEY: The Australian and New Zealand dollars hit multi-month lows against their US counterpart on Monday as worries about China's latest property curbs slugged Asian stocks and undermined sentiment generally.
A sharp drop in Chinese stocks overshadowed a mixed bag of domestic data which did nothing to alter expectations the Reserve Bank of Australia (RBA) will likely keep interest rates steady at 3 percent at its policy meeting on Tuesday.
The Aussie slipped 0.8 percent to as deep as $1.0119, its weakest in eight months, with stop-loss selling tripped on the break of October's lows.
Much of the fall came after Chinese shares slid 3 percent when Beijing said it could increase property down payments and loan rates in parts of the nation where home prices are rising too quickly.
Any slowdown in home construction could lessen demand for steel and thus iron ore, Australia's single biggest export to China. The highly liquid Aussie currency is also often used by funds as a proxy for risk in China, and Asia in general.
The local dollar has been in a downtrend against its US counterpart since topping out at $1.066 in early January.
"(Aussie) bulls have just lost patience," said a trader at a European bank in Singapore.
"It's had a good run but it made no progress on the topside in February," he said, adding he was forecasting the Aussie back to parity by mid-month.
The New Zealand dollar followed with a 0.5 percent drop to $0.8206, a two-month low.
The kiwi has fallen 4 percent in the last two weeks, retreating from a 17-month high of $0.8534, as investors have scaled back massive bets for more gains in the currency.
"We suspect negative NZD/USD momentum and the break below key support at $0.8280 means NZD/USD will continue to leak lower in the near-term," BNZ analysts said in a note. "However, we doubt it will be long before the uptrend resumes."
Technical support is seen at $0.8161, its 200-day moving average, and $0.8053, a trough hit in November. Resistance seen at $0.8280, a previous support level, and $0.8297, its 100-DMA.
The Aussie got little help from a raft of economic data added to expectations the RBA will stand pat on rates this week .
Nearly all economists in a Reuters poll forecast no change to the record-low 3 percent cash rate, while financial markets put only 17 percent chance of a cut.
Markets are still pricing in 52 basis points of reductions over the next 12 months.
Mirroring Treasuries, Australian government bond futures rose. The three-year contract gained 0.04 points to 97.310, close to a one-month peak of 97.330.
The 10-year contract extended last week's gains, rallying to a fresh five-week high of 96.755 and eyeing key resistance at 96.771, the 38.2 percent of the June-Feb move.
New Zealand government bonds firmed, pushing yields 5 basis points lower across the curve.
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