SYDNEY/WELLINGTON: The Australian and New Zealand dollars fell on Monday as uncertainty about the impact of a proposed bailout for Cyprus sent investors scurrying for safety in a move that saw bond futures bounce off 10-month lows.
US dollar and yen big beneficiaries of the safe-haven shift, with the Japanese currency shooting higher as speculators were caught badly short of the currency.
But the shift to safety also boosted Australian bonds, taking three-year cash yields down 15 basis points to 2.96 percent, the biggest daily drop since May last year.
Aussie slides to 98.25 yen, having crashed as much as two yen at one stage since Friday. The Aussie climbed a fresh 4-1/2-year peak of 99.99 last week, a whisker away from a psychologically important barrier of 100.
The kiwi falls to 78.10, from around 79.00 yen on Friday. It scaled 79.88 last week, its highest since July 2008.
Against the US dollar, Aussie at $1.0358, from $1.0398 in late New York trade. It had hit a one-month high of $1.0413 after soft US data dented the greenback.
Support seen around $1.0287 and resistance initially at $1.0380 ahead of $1.0400.
New Zealand dollar is harder hit, falling 0.7 pct to $0.8230 from Friday's $0.8266 in New York.
Initial support for the kiwi back around psychological level of $0.8200 and more substantially at $0.8160, with resistance at $0.8280.
The euro nurses losses across the board after the Cyprus bailout, skidding as low as A$1.2432, its weakest since Jan. 10. Last at A$1.2462, having lost nearly 2 pct last week. Euro at NZ$1.5686, from a high of NZ$1.5917 on Friday.
Euro zone finance ministers want Cypriots to pay up to 9.9 percent of their deposits in return for a 10 bln euro aid package. If approved by the island's parliament on Monday, it will be the first time savers have had to foot part of the bill for a European bailout, raising fears that the model could become a precedent for future bailouts in the euro zone.
Domestic data out on Monday showed New Zealand consumer confidence held close to its highest level in a year, while activity in services sector rose to its best level in four months in February.
Flight from risk caused a vicious rally in Australian government bond futures. The three-year contract jumps 0.15 points to 97.030, while the 10-year contract adds 0.135 points to 96.485, leading to the steepening of the yield curve.
Bond futures plumbed 10-month lows last week following upbeat data at home and offshore, with markets lengthening the odds of further easing in Australia.
Likewise, New Zealand government bonds rally sending yields as much as 10 basis points lower at the long end of the curve.
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