SYDNEY/WELLINGTON: The Australian dollar fell to 4-1/2-year lows on Tuesday, while the New Zealand dollar struggled as growth concerns in China and plunging oil prices encouraged investors to buy the safe haven yen.
The Australian dollar was at $0.8222, having touched $0.8200, its weakest since mid-2010 and an area packed with option barriers. A clear break would target the 2010 low of $0.8066. It got cold-shouldered after China's factory activity slowed more than expected last month.
The Aussie is sensitive to news out of China, Australia's top export market.
A rallying yen also kept the Aussie under pressure after another slump in oil prices saw a bout of risk aversion. The Aussie slipped to a seven-week trough of 96.65 yen, having shed more than 6 yen in three weeks.
Not helping were minutes the Reserve Bank of Australia's policy meeting which showed the central bank wanted the currency to fall further to support the economy.
Recent disappointing economic data at home have prompted financial markets to fully price in a further cut to 2.25 percent, but some economists disagree.
"The domestic economy remains stuck in a low gear," said Janu Chan, a senior economist at St George Bank.
"However, we believe that the economy will not deteriorate significantly enough for the RBA to cut rates again."
The New Zealand dollar was pinned at $0.7735, near a session low of $0.7723 hit in early trade. It faces more pressure if fortnightly auction results due later in the day show global dairy prices continue to fall. Dairy is New Zealand's biggest export earner.
New Zealand government bonds slipped, pushing yields as much as 2 basis points higher on mid-dated debt. Australian government bond futures hovered near two-year peaks, with the three-year bond contract down 2.5 ticks at 97.760.
The 10-year contract added 2.25 ticks to 97.1150.
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