SYDNEY/WELLINGTON: The Australian and New Zealand dollars struggled for momentum on Monday as traders were reluctant to make any significant moves in a holiday-heavy week.
The Australian dollar held at $0.7155, having met a wall of sellers ahead of 72 US cents. It touched a one-month trough of $0.7097 last week and was down 12 percent for the year.
It held its ground against a battered Canadian dollar at C$0.9990, having briefly popped above parity on Friday. Tumbling oil prices have taken a toll on the loonie, down around 5 percent this year.
Underpinning the Aussie was a reduction in US dollar bullish bets. Contracts in Australian dollar net short positions fell to around 72,000 in the week ended Dec 15, from 81,000, data from the Commodity Futures Trading Commission showed. Speculators also added to their net Aussie long positions. The market reversed course on the kiwi dollar to be net long, from net short.
Some dealers suspect the corrections will be short-lived.
"It's unlikely traders will re-engage this week and will likely err to paring back speculative bets and head for the sidelines and keep the powder dry for the new year," said Stephen Innes, senior trader at FX/CFD firm OANDA Australia and Asia Pacific.
The New Zealand dollar continued to consolidate at 0.6722. The Kiwi is benefiting after its US counterpart was weighed down by disappointing economic news.
"The run of data weakness (in the US) continues to reinforce the gradual message" from the Federal Reserve, said ANZ Bank.
The New Zealand dollar also found support in improving consumer sentiment and strong migration data.
Taking their cue from offshore moves, New Zealand government bonds gained, sending yields 4 basis points lower at the long end and 3 basis points lower at the short end. Australian government bond futures hovered near multi-week highs, with the three-year bond contract steady at 97.930. It touched its highest since mid-November.
The 10-year contract edged up half a tick to 97.1800, while the 20-year contract added 1.5 ticks to 96.6850.
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