WELLINGTON/SYDNEY: The Australian dollars fell to six-week lows on Monday after a weak reading of retail sales added to worries about a slowing Chinese economy and raised the risk of more rate cuts.
Aussie slips 0.7 pct on the day to $1.0250, from $1.0290 in early local trade, having dipped as low as $1.0239, its weakest since late July after a raft of disappointing data at home.
Interbank futures edged up as the market priced in a modestly greater chance of a cut in interest rates by year-end. The Reserve Bank of Australia (RBA) holds its September policy meeting on Tuesday and is still expected to keep rates steady at 3.5 pct for a third straight month.
Weak data gives a fillip to Australian debt futures which jump to five-week highs. The three-year bond contract rises 0.08 points to 97.630, while 10-year contract adds 0.055 points to 97.05.
Australian retail sales unexpectedly fell 0.8 pct in July, while job ads slipped 2.3 pct in August. Other data indicated weakness in company profits last quarter while business inventories were a drag on economic growth.
Antipodean currencies were already under pressure after China's official PMI released on Saturday dipped below 50 for the first time since Nov 2011. That was the latest sign that the world's second-biggest economy is struggling against global headwinds.
Aussie and kiwi are sensitive to news out of China, the single biggest export market for Australia and second-biggest for NZ.
But hopes the US Federal Reserve and the European Central Bank would soon add more stimulus to revive their respective economies seem to have helped cap losses.
Support for the Aussie seen at $1.0220, the 38.2 pct of the June-August climb, ahead of $1.0205, the 100-day MA. Resistance found near $1.0300.
Aussie and kiwi under pressure across the board, hovering near two-month lows on the euro and a 6-week trough against the yen.
The New Zealand dollar on the back foot, edging down to a low of $0.7985 from its $0.8000 local open after soft trade numbers. Last at $0.7994.
The kiwi's first line of support seen at around $0.7970, the five week low touched last week, then $0.7957. Resistance initially at $0.8058.
New Zealand terms of trade fall the most in three years in the second quarter, reflecting softer export prices. However, import volumes drop much greater than export decline, pointing to a positive contribution to Q2 GDP.
NZ government bonds prices firmer, sending yields as much as 7 basis points lower along the curve.
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