SYDNEY: The Australian dollar eased slightly against a broadly stronger greenback on Monday, as lower commodity prices and continued lockdowns in the country hurt sentiment, while the Kiwi also came under selling pressure but had recovered by midday.
Lower prices for iron ore, one of Australia’s main exports, prices and the strength of its American counterpart following strong US jobs data combined to get the Aussie off to a weaker start. The Australian dollar lost 0.35% $0.73228, before crawling back to be almost flat in early afternoon.
The kiwi dollar likewise fell 0.44% to $0.6980 in late morning, before recovering to be 0.1% up at $0.7017 in the early afternoon - roughly in the middle of a range of $0.6953 to $0.7088 for the month so far.
Australia’s most populous state of New South Wales expanded its COVID-19 lockdown to another rural town on Monday due to concerns the virus may be spreading from Sydney into the countryside.
Meanwhile, iron ore futures slumped more than 5%, pressured by prospects of improved supply and weakening Chinese demand and oil prices eased further amid worries coronavirus travel restrictions would threaten bullish expectations for demand.
“Over the weekend we had yet more evidence that Chinese demand for iron ore really is waning with July imports being the lowest in 14 months and on a seasonally adjusted basis imports hit 16-month lows,” Westpac strategists noted.
They added that the domestic economy would be a key focus of traders this week, as business and consumer confidence sentiment indicators would likely take a hit from aggressive lockdowns.
Australian bonds fell on Monday, pushing the yield on the 10-year government benchmark two basis points higher at 1.180%. Three-year bond yields were likewise two basis points higher at 0.305%. New Zealand bonds were unchanged.
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