SYDNEY/WELLINGTON: The Australian and New Zealand dollars spent Monday on the sidelines with progress capped by stiff chart resistance and uncertainty over Europe and the United States.
The Aussie was holding around $0.9362, off a low of $0.9335 touched Friday and not too far from this year's peak of $0.9461 set last month.
It has been stuck in a tight $0.9203-$0.9410 range, having repeatedly failed to make a sustained a break above 94 cents since mid-April, leaving bulls cautious.
Joseph Capurso, a strategist at Commonwealth Bank of Australia, said the release on Tuesday of the Reserve Bank of Australia's (RBA) release of its May meeting could see the currency take a crack at the 94 cents bar again.
"If the RBA is a little more positive, that could be enough (to see the currency rise above 94 cents)," he said. Also in focus this week are minutes of the Federal Reserve April 29-30 policy meeting as well as a private survey on China's manufacturing sector for May. CBA's Capurso sees scope for the Aussie to gain support should the Fed Chief sound bearish.
Support was seen at $0.9334, the 50 percent retracement of the April-May fall.
Against the euro, it stood within a whisker of a six-month high at A$1.4632.
The euro has shed 12 cents since a peak in January, largely on heightened speculation the European Central Bank (ECB) was preparing an easing package for its early June meeting. Australian government bond futures retreated from multi-month highs, with the three-year bond contract one tick lower at 97.160.
The 10-year contract was steady at 96.290, having touched a nine-month peak of 96.305 Friday.
Likewise, yields on the 10-year cash bonds edged up to 3.72 percent, from 3.70 percent in the last session.
They were at 4.41 percent in January.
The premium offered by Australian 10-year yields over three-year yields shrank to 81 basis points for the first time since June, leading to a flattening of the curve on expectations the RBA will maintain record low rates of 2.5 percent this year.
The New Zealand dollar traded at $0.8640, little changed since late last week but keeping its distance from a 2 1/2-year high of $0.8779 hit earlier in the month, as a Reserve Bank of New Zealand warning against currency strength has cooled demand for the high-yielding currency.
The kiwi was little changed after data showed a stronger services sector and a rise in producer prices, supporting expectations that official interest rates will rise further.
It traded at 87.70 yen, finding its footing after selling off from a 88.65 yen late last week. Against a currency basket, the kiwi traded at 80.31, having retreated from a post-float high around 81.00 hit earlier in the month.
Investors awaited a reading of global dairy prices later this week to gauge the kiwi's near-term direction, with market participants expecting a further slide if the price of milk products, New Zealand's largest export product, continues to fall.
Still, many in the market expect strong bids for the kiwi below $0.8600 will continue to provide support in the near term. With official New Zealand rates at 3.0 percent and rising, the kiwi's relative rate advantage was seen as a positive factor for the currency.
Technical support lay at $0.8625, where a trendline drawn from lows hit in February and April lay, while the 55-day moving average at $0.8595 was also seen as keeping the kiwi in narrow ranges.
New Zealand government bonds were a touch lower, with yields rising 1 basis point higher along the curve.
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