SYDNEY/WELLINGTON: The Australian and New Zealand dollars held hefty gains on a battered euro and marked time against their US counterpart on Monday, as geopolitical tensions in Ukraine and a week packed with events kept investors cautious.
The euro drifted to A$1.4052, close to a 10-month trough of A$1.4043 touched Friday.
It fell 2.4 percent in August and charts are negative with the 5, 10 and 20-day moving average edging lower.
The deterioration of the situation in Ukraine only reinforced expectations of another round of policy easing by the European Central Bank, which holds its policy meeting this week.
A break of A$1.4040 could open a test of A$1.3714, the 50 percent retracement of the 2012-2014 rise.
The Australian dollar again proved resilient to broad US dollar strength and to signs of softness in the Chinese economy to be at $0.9332, not far from a peak of $0.9374 touched last week.
An official survey showed growth in China's manufacturing sector retreated from a 27-month peak in August, slightly missing forecasts.
A private survey also suggested the economy was losing momentum with HSBC PMI slipping to 50.2 in August, from 51.7 in July.
The Australian dollar is sensitive to news out of China, the country's key export market. "We needed a more significant surprise to justify any reaction," said Ray Attrill, global co-head of FX strategy at National Australian Bank.
At home, a private gauge of Australian price pressures showed consumer price inflation at its lowest in seven months in August, a welcome sign of moderation after higher readings in the second quarter.
The result supports the Reserve Bank of Australia's (RBA) stable interest rate outlook.
The RBA holds its monthly policy meeting on Tuesday and is considered certain to keep its cash rate steady at 2.5 percent for a 13th straight month.
Other local data included a jump of 0.8 percent in business inventories in the second quarter, an outcome that will underpin Australia's gross domestic product (GDP) figure due Wednesday.
The New Zealand dollar started the new month steady around $0.8365 and.
While local trade data surprised on the upside, the expectation is that the commodity currency will remain under pressure.
"Negative momentum in the New Zealand dollar remains intact. We expect a break below $0.8310 towards $0.8250," said Westpac senior strategist Imre Speizer in a commentary.
"The main factor behind the NZD's six-week fall has been a strong US dollar - something we expect to persist during the week ahead."
The kiwi fell 1.7 percent in August to touch a six-month low of $0.8311.
The fortnightly dairy auction by Fonterra will be scrutinised for any signs of prices stabilising, after they fell more than 40 percent from their peak in February.
The kiwi took some comfort from an unexpected 0.3 percent lift in the terms of trade in the second quarter, where the fall in import prices outstripped export prices.
A Reuters poll had forecast a 2.3 percent fall. However, the data also showed a 5.3 percent slide in export volumes, while import volumes rose in a drag on GDP.
New Zealand government bonds traded with a mild offered tone, sending yields half a tick higher along the curve.
Australian government bond futures were subdued, with the three-year bond contract unchanged at 97.370.
The 10-year contract shed 2 ticks to 96.695, but was still very close to 15-month highs.
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