SYDNEY/WELLINGTON: The Australian and New Zealand dollars were subdued on Monday as concerns about China's economic strength and a possible US debt default hurt risk sentiment.
The Aussie slipped to $0.9440, from $0.9470 in New York on Friday, after data on Saturday showed China's export growth unexpectedly fizzled in September, underscoring worries about flagging global demand.
The market often uses the Aussie as a liquid proxy to hedge against economic news out of China, Australia's top export market.
A breakdown of the data, however, showed Chinese imports from Australia rose 28 percent in September, the fastest pace of annual growth in over a year.
In addition, iron ore imports surged to a record of more than 74 million tonnes in a move that augurs well for Australia's trade figures due out next month.
Iron ore is Australia's largest single biggest export earner.
Also weighing on the Aussie were concerns the United States may default on its debts as lawmakers negotiate a deal to raise its borrowing facility ahead of an Oct. 17 deadline.
Data at home showed a bigger-than-expected fall in housing finance.
Still, the Aussie proved resilient, hovering around the $0.9390-$0.9485 region, a range it has held since early October. On a trade-weighted basket, the Aussie matched a four-month peak of 72.3 on Friday.
It barely moved after a slightly higher-than-expected inflation reading in China.
Support for the Aussie is seen at $0.9390, with stiff resistance at $0.9485, ahead of $0.9530, a four-month peak set last month.
The New Zealand dollar was sitting in familiar territory at $0.8316, having touched a three-week high of $0.8355 on Friday.
It has ebbed and flowed within a broad range of $0.8200-$0.8350 so far this month with investors taking their lead from the state of play in the US fiscal impasse and whether talks will avert a debt default.
"We can expect the US dollar to remain on the back foot against core currencies such as the yen, but the general risk averse atmosphere should also hurt the NZ dollar more than the US dollar," said Westpac senior strategist Imre Speizer.
However, a resolution is seen as a positive for the kiwi, pushing through current strong resistance at $0.8350 and heading back to the 4-1/2-month high of $0.8445 set last month.
Against the yen, which was being boosted by safe-haven demand, the kiwi fell 0.3 percent to 81.64 yen after hitting a three-week high of 82.19 yen on Friday.
The currency was unmoved by industry data showing a 0.8 percent rise in national house prices last month as well as a jump in sales.
Other data of note this week is third quarter inflation, which is expected to be at its strongest in two years, although still at the bottom of the central bank's target band.
New Zealand government bond prices were firmer, resulting in yields dipping 2 basis points along the curve.
Australian government bond futures bounced from recent lows with the three-year bond contract up 3 ticks to 96.900. The 10-year contract edged up 2.5 ticks to 95.935.
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