SYDNEY: The Australian and New Zealand dollars were little changed on Monday, hovering near recent lows after Friday's declines that were driven by concerns over demand for oil and other commodities amid a resurgence of pandemic curbs in Europe.
The Aussie was trading at $0.7247, having shed 1.2% last week, as investors reacted to a renewed lockdown in Austria to contain a fresh wave of COVID-19 cases. The prospect of oil releases from strategic reserves held in the US, China, India and Japan also weighed on the antipodean currency.
On top of that, disappointing earnings in China reinforced worries about slowing growth in the world's second-largest economy and was putting pressure on the risk-sensitive currencies, strategists said. New Zealand's dollar was steady at $0.6997 and below the psychological $0.70 level.
It's next support level is at $0.6805 while resistance is pegged at $0.7045.
The market is expecting the Reserve Bank of New Zealand will raise the official cash rate on Wednesday by at least 25 basis points - with some betting even a bigger 50-basis-point move - given recent stronger-than-expected inflation and employment data.
"NZD/USD risks a temporary dip this week if the Reserve Bank of New Zealand raises interest rates by 'only' 25bp," said strategists at Commonwealth Bank of Australia in a client note.
However, "a sufficiently hawkish tone and forecast upgrade should be enough to minimise NZD downside."
In contrast to the RBNZ, policymakers in Australia have taken a more cautious approach to raising rates. And that has seen the Aussie faced additional selling pressure, including from last week's push back by the Reserve Bank of Australia against bets for 2022 rate hikes.
In the bond market, price moves were small on Monday.
The 10-year Australian bond benchmark one basis point lower to 1.81%, and three-year bond yields were unchanged at 0.968%.
New Zealand yields were one basis point lower at the lower end of the curve, and down two basis points at the longer end.
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