SYDNEY/WELLINGTON: The Australian dollar stumbled to six-week lows against its US counterpart on Tuesday as a soft reading on domestic business confidence served as an excuse for speculative selling in an otherwise quiet market.
The Aussie eased as much as a quarter of a cent to $0.9336 and passing the week's previous low of $0.9345, before bids emerged. Dealers said speculators were now eyeing a test of chart support in the $0.9280/9300 area.
The slide came after a business survey showed confidence had lapsed back in October after a couple of strong months while sales and profits stayed subdued.
The report contrasted with recent evidence of improving conditions in housing and retail sales, providing one more reason for the Reserve Bank of Australia (RBA) to keep an easing bias.
The Antipodean currencies had already come under pressure on Friday 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.
"It clearly is a sell-on-rallies prospect (for the Aussie) as long as near-term Fed tapering talk persists," said David Scutt, a trader at Arab Bank Australia.
The Aussie also touched a one-month low of 71.8 on a trade-weighted basis.
Australian government bond futures got only passing relief from the business numbers, having followed Treasury prices sharply lower since Friday.
The three-year bond contract lost 3 ticks to 96.81, while the 10-year contract fell 4.5 ticks to 95.780. Investors are now keeping an eye on China where the country's leaders will unveil a reform agenda for the next decade.
The focus is on economic rebalancing by putting greater efforts on consumption to move away from exports and investment, China's main growth engines. Analysts suspect there is little risk of a major surprise.
NZ DOLLAR
The New Zealand dollar edged down with the Aussie to trade at $0.8236, testing the floor of the week's $0.8230 to $0.8290 range.
"We note a double bottom in the NZ dollar has appeared in our charts, with last night's low mirroring Friday's low," said ASB Bank economist Daniel Smith, adding that any rallies would be a trigger to sell the kiwi.
Near-term support remains at $0.8220, and more solidly at the 200-day moving average of $0.8180, while resistance is seen at $0.8290/00.
The kiwi was drawing support from modest gains in the cross rates against the Aussie and the yen. Investors shrugged off industry data showing house prices hit a record high last month.
There were some tentative signs that the central bank's limit on low deposit housing loans, which came into effect last month, might be weighing on market sentiment.
The issue is likely to be to the fore in the Reserve Bank of New Zealand's semi-annual financial stability report due on Wednesday. New Zealand government bonds were flat along the curve.
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