SYDNEY/WELLINGTON: The Australian and New Zealand dollars were nursing losses on Monday after upbeat US jobs data strengthened the US dollar and bolstered the case for the Federal Reserve to scale back stimulus as early as next month.
The Aussie wallowed at $0.9385, having gone as deep as $0.9352 on Friday, its lowest in six weeks.
Charts suggest a test of $0.9300, and a clear break could result in a move back below $0.8900.
US employers took on 204,000 new employees last month, almost twice the number forecast by analysts, suggesting the US economy was on a firmer footing.
The Aussie skidded 0.8 percent on the news but found a steadier footing after data on Saturday showed China's factory output and investment grew in October, while annual inflation quickened to its fastest in eight months.
Australia is very sensitive to news out of China, a key export market.
Underpinning positive sentiment at home was a 4.4 percent rise in home finance in September versus forecasts of 4 percent. Housing activity is a key area targeted by the Reserve Bank of Australia's (RBA) to stimulate growth.
"This pick-up has been driven mainly by lending to investors rather than for construction or owner-occupier housing. The pick-up in loans growth to the latter groups usually marks a more robust response in the housing market to RBA rate cuts," said Will Richardson, an analyst at Macquarie Bank.
Last week, the RBA kept rates at a record low of 2.5 percent, saying the full effects of past interest rate cuts were still working through the economy. Interbank futures imply a one-in-five chance of another cut next year.
The New Zealand dollar was at $0.8265 and trading within a relatively tight range, after it had slumped a full cent to a low of $0.8225 after the strong US jobs numbers.
The kiwi is expected to be more in touch with local data this week, which is likely to show solid growth. "Strong support from $0.8180 to $0.82 coupled with strengthening New Zealand data will make it a hard road lower, but if the US continues to recover further NZ dollar strength will be hard-fought and transitory," ANZ Bank analysts said in a note.
Near-term support for the kiwi is seen at $0.8220 and more solidly at $0.8180, with $0.8310 capping the topside.
Among the local data highlights this week are the Reserve Bank of New Zealand's semi-annual financial stability report, which will be watched for comments on the housing market and the recently imposed limits on low-deposit/high loan-to-valuation-ratio mortgages.
Other local data includes quarterly retail sales, house sales, manufacturing activity, and consumer sentiment.
Figures out Monday showed electronic card retail sales rose 1.4 percent in October, the second biggest monthly rise ever. The data gives only a partial look at consumer activity.
New Zealand government bonds were softer, sending yields as much as 6.5 basis points higher.
Mirroring a sharp fall in US Treasuries, Australian government bond futures fell with the three-year bond contract down 7 ticks at 96.830.
The 10-year contract lost 10 ticks to 95.815, pulling closer to 95.745, an eight-month trough set mid-October.
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