Aussie, NZ$ on defensive as euro hammered

WELLINGTON/SYDNEY: The Australian and New Zealand dollars were under pressure early on Monday as the greenback powered ahead on fresh worries about euro zone debt that prompted a broad sell-down in riskier assets and a rush to Treasury bonds.

* The Aussie at a near two-week low of $1.0406, having fallen more than one pct to $1.0422 on Friday.

* Traders say sentiment still weak for commodity currencies, with the Aussie breaking support around $1.0415/23 and now set to test $1.0387, while the upside seen capped around $1.0480.

* The NZ dollar suffers same fate, shedding 1.5 pct to a three-week low of $0.8192 before crawling back to 0.8215 early. Kiwi now looks vulnerable on the downside and may test the $0.8200 support level.

* The euro hit 6-1/2 month lows against the US dollar on nervousness over the outcome of a Greek debt swap deal and on jitters fueled by the planned resignation of Juergen Stark, the top German on the European Central Bank's board, in protest over its controversial bond-buying program.

* Benchmark US 10-year yields down to 1.92 pct from 1.98 pct late Thursday. Benchmark yields touched 1.896 percent on Friday, the lowest since at least World War Two.

* The euro weak around A$1.3012 , having fallen to a six-week low of A$$1.2995 . It may test the July trough of A$1.2922, ahead of an all-time low of A$1.2910 struck in December.

* Against the kiwi, the euro also dived to NZ$1.6554 , lowest since early August. It last traded around NZ$1.6591, nearing NZ$1.6560, the 76.4 percent retracement of the move from NZ$1.6186 to NZ$1.7770.

* Reduced appetite for risk sees the Antipodeans slipping against the safe-haven yen to multi-week lows, with the Aussie last at 80.82 yen , and the kiwi at 63.68 yen .

* Aussie gets some help from upbeat Chinese trade data showing imports from Australia rose almost 54 percent in August, from a year earlier. Australian trade figures for August are due later Monday and should show another sizable surplus .

* NZ central bank expected to hold rates steady on Thursday as global uncertainty overshadows the need to start raising rates to contain inflation pressures. However, RBNZ still expected to affirm the need to start withdrawing stimulus at some stage.

* Market pricing implies 11 percent chance of a 25 bps rise this week, with around 40 bps of tightening over the next 12 months.

* Australian bond futures rally, with the three-year contract up 0.09 points to 96.350 and the 10-year climbing 0.045 points to 95.775. NZ government bonds still flat early.

Copyright Reuters, 2011