The Australian dollar stayed near a six-month trough on Monday after the government forecast a smaller-than-feared budget deficit this year, but that could not fully deflect the threat of a downgrade to the country's top credit rating. The Aussie held at $0.7300, after three straight days of heavy losses that pulled it to its lowest since June 3. The currency has shed all of its gains this year after the Federal Reserve pushed US interest rates higher last week.
The Australian dollar was up as much as 6.6 percent in early November but tumbled on expectations of inflationary policies by US President-elect Donald Trump. The Fed has already signalled its intention to hike rates at a faster pace. The Aussie rose against its New Zealand counterpart for a third straight day. It barely moved on the yen but stayed near a one-year peak.
The New Zealand dollar ticked higher on Monday, snapping three straight days of losses. The Kiwi rose 0.3 percent to $0.6982, from a six-month low of $0.6932 hit on Friday. That remained well below a one-month high of around $0.7230 held before the Fed's decision to hike interest rates.
New Zealand government bonds eased, sending yields 1 basis point higher along the curve. Australian government bond futures slipped, with the three-year bond contract down 4 ticks at 97.950. The 10-year contract fell 2.5 ticks to 97.105. A patchy Australian economic performance - record low wages growth and lacklustre nominal growth - has not helped. Treasurer Scott Morrison on Monday predicted a A$10 billion ($7.29 billion) deterioration in the government's budget deficit over the next four years.
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