SYDNEY/WELLINGTON: The Australian and New Zealand dollars came under pressure in thin trade on Monday, as growing speculation of drastic monetary easing in Europe gave a boost to the US dollar.
The Australian dollar dropped to a 5-1/2-year trough of $0.8053, as the US dollar gained most from a sharp decline in the euro.
The Aussie was at $0.8086 at 0205 GMT, with technicals pointing to further downside.
Key support was seen at 80 cents, then $0.7945 which is the 61.8 percent retracement of the $0.6007-$1.1081 rise.
The Aussie tumbled 8.5 percent last year and has lost nearly 1 percent in 2015.
The New Zealand dollar plumbed a one-month trough of $0.7653, to be at $0.7670 at 0205 GMT. In the past, quantitative easing "was positive for the kiwi because it was positive for risk appetite but today QE in Europe and QE in Japan is positive for the US dollar and therefore negative for the kiwi," BNZ currency strategist Raiko Shareef said.
The kiwi could be dragged back towards a 2-1/2-year low of $0.7609 hit last month if the euro continues to fall in illiquid markets. A break of $0.7600 would open the door to key $0.7450/7500 support.
Not helping euro sentiment was renewed speculation about the possible exit of Greece from the single currency. As a result, the euro shed a cent and a half to hit a one-month low of A$1.4719 at one stage, to be at A$1.4779 as 0212 GMT.
Against the kiwi, the euro briefly touched a 5-1/2-month low around NZ$1.5459 but recouped its losses to be at NZ$1.5585.
The Antipodeans also rose against a soggy pound after weak U.K. economic data diminished prospects of an early 2015 rate hike by the Bank of England.
Sterling briefly touched multi-week lows against both the Aussie and kiwi dollars.
The Aussie extended gains versus its kiwi neighbour to NZ$1.0540, clawing back from a record low around NZ$1.0410 hit last week. New Zealand government bonds were supported, nudging yields 4 basis points lower across most maturities.
Australian government bond futures held near 2-1/2-year highs, with the three-year bond contract up 4 ticks at 97.890. The 10-year contract added 11 ticks to 96.2900, having climbed to its highest since July 2012 at 97.3100.
The 10-year cash yield fell to 2.7 percent, down from 3.7 percent as recently as September, as markets wager on an interest rate cut by the Reserve Bank of Australia.
With the Federal Reserve edging closer to raising interest rates, the premium offered by local debt over US bonds has dropped to the thinnest in eight years at 64 basis points.
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