WELLINGTON/SYDNEY: The Australian and New Zealand dollars drifted sideways on Monday, with broader progress capped by chart resistance and uncertainty over Ukraine.
The Australian dollar was holding at $0.9310, having kept to a tight range for the last three sessions.
Trading is particularly thin due to the summer holidays in the northern hemisphere.
The currency has repeatedly failed to sustain a break above $0.9320-30 resistance in recent days, leaving bulls cautious.
It has slowly recovered from a dip to a two-month low of $0.9239 in early August, but remains in a well-defined range of 92 to 95 cents that has lasted since March.
The Aussie is up more than 4 percent so far this year, underpinned by relatively high-yielding government bonds and a steadily growing economy.
The key event this week for Aussie bulls is Reserve Bank of Australia Governor Glenn Stevens' twice-yearly parliamentary testimony on Wednesday.
Traders will pay special attention to the questions and answers session that will follow the RBA statement. "What is crucial is that the politicians need to ask pertinent questions about housing and house prices, the high Aussie dollar, the impasse on the budget and whether the level of the cash rate is appropriate when everyone else is at zero," said Annette Beacher, head of Asia-Pacific research at TD Securities in Singapore.
"Then we could see something that's not carefully scripted and worth highlighting."
The New Zealand dollar was steady around $0.8487 having again failed to sustain a move above $0.8500, and looks to have run out of steam for the time being.
It will likely face further pressure from Fonterra's fortnightly dairy auction on Wednesday, where prices have been falling for some time. "Another poor result would weigh on the kiwi and could trigger a dip below support around 0.8450," said ASB senior economist Chris Tennent-Brown in a note.
Dairy prices have fallen more than 40 percent since their high point in February, which has led to Fonterra slashing its forecast payout to farmers for the just-started season.
The outlook for the kiwi is mixed, with its elevated yield and prospect of further rate rises at some stage still supportive. Near term support is seen at $0.8455, close to the 200-day moving average, and more substantially at $0.8400, while solid resistance lies at $0.8530.
It was unmoved by a survey showing services sector activity perking up to a three-month high. Other data this week includes second-quarter producer prices, migration, and consumer confidence.
The pre-election economic and fiscal update will be released on Tuesday. It is a legally-required opening of the government accounts to show how official finances and economic forecasts are tracking, but is unlikely to cause ripples in the market.
New Zealand government bonds were mostly up, sending the 10-year bond yield to a one-year low of 4.14 percent.
Australian government bond futures rose, with the three-year bond contract up 2 ticks at 97.420. The 10-year contract added 4 ticks to 96.560 in a bullish flattening of the curve.
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