WELLINGTON/SYDNEY: The Australia and New Zealand dollars were firm on Monday as their US counterpart was undermined by jobs data that prompted markets to pare back expectations of an earlier start to a tightening cycle by the Federal Reserve.
The Australian dollar held steady at $0.9317, having bounced from a two-month low of $0.9275 touched on Friday. It hopped as far as $0.9334 but quickly ran out of steam in thinned trading due to a bank holiday in Sydney.
"The AUD looks to be capped by $0.9340/50 but we would not be surprised to see it pop higher once London comes in," said Westpac in a note. Underpinning the Aussie was a surprisingly large 0.6 percent increase in Australian retail sales in June from the previous month that put paid to a soft patch in spending.
The outcome beat forecast of a 0.4 percent gain and supported the view of a steady interest rate outlook.
The Reserve Bank of Australia (RBA) will hold its monthly policy meeting on Tuesday with all 23 economists seeing the cash rate unchanged at a record low 2.5 percent, where it has been for the past 12 months.
The consensus is for rates to stay steady through 2014, and then to start rising gradually next year.
The Aussie regained some ground against the yen and euro , but was still hovering around two-month lows on a trade-weighted basket.
Other local data on Monday included a modest rise in Australian job ads in July in a sign of a gradual pick-up in the labour market.
A private gauge of Australian inflation showed price pressures subsided last month, a welcome development for policy makers after official figures surprised on the high side in the second quarter.
Across the Tasman sea, the New Zealand dollar was steady around $0.8510, having once again found solid support near $0.8460 following a flurry of US data on Friday.
The kiwi has fallen about 3 percent in the space of 10 days following the Reserve Bank of New Zealand's move to pause its tightening programme, along with weakness in export prices.
The latest ANZ Bank commodity price index fell for a fifth consecutive month to touch a 16-month low.
But for all the rapid fall in the currency, and predictions of further losses, it remains well supported.
"The NZ dollar's resilience confirms that global focus remains on yield, and that New Zealand remains relatively isolated in providing a 'safe-haven' destination and appealing, relatively high interest rates," said Bancorp Treasury analysts in a note. Support remains around the 200-day moving average at $0.8450, with resistance at $0.8540.
Key local influences on the kiwi this week are dairy giant Fonterra's latest auction on Wednesday. On the same day, second quarter labour market data are expected to show unemployment edging lower to 5.8 percent, while wage growth is seen staying restrained.
New Zealand government bonds were trading with a firmer tone, sending yields as much as 3 basis points lower.
Australian government bond futures edged up from recent multi-week lows, with the three-year bond contract up 2 ticks at 97.300. The 10-year contract added 3.5 ticks to 96.520.
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