Aussie, kiwi ease

The Australian and New Zealand dollars struggled to find friends on Monday as investors took profits ahead of a week packed with events and data. The Australian dollar fell to $0.7173, from $0.7196 late on Friday and a one-month peak of $0.7283 touched last week. Support was found at $0.7159. It also lost ground against a soggy euro which edged up to A$1.4751. Yet, the Aussie has gained 4.5 percent in November which, if sustained, would be the largest monthly rise in three years.
The Aussie was also on to holding hefty gains against the Swiss Franc, up nearly 5 percent in November. Much of the strength is due to a diverging interest rate outlook with the European Central Bank expected to announce further stimulus at its policy meeting on Thursday.
In contrast, the Reserve Bank of Australia is likely to keep rates steady for a while. All 24 economists polled by Reuters see the central bank standing pat at a record low of 2.0 percent at its policy meeting on Tuesday. Half, though, are forecasting a rate cut by the third quarter of 2016. Interbank futures imply a 62 percent chance of a cut by May. "While the market is unanimously expecting rates to remain on hold, the economic calendar is jam-packed with high risk Aussie data events including GDP, trade balance and retail sales. That should keep local traders hopping," said Stephen Innes, a senior trader at FX/CFD firm OANDA Australia and Asia Pacific.
A private-sector gauge of Australian inflation out on Monday remained subdued in November, a reminder there was plenty of room for further rate cuts if needed. The New Zealand dollar edged down 0.2 percent to $0.6520 as investors waited for a stream of data due this week. Investors will be closely watching data on New Zealand's terms of trade on Tuesday and for the results of the global dairy price auction which takes place early Wednesday morning.
A closely-watched survey out on Monday showed business confidence rose to a six-month high in November. Analysts said the kiwi would face resistance at the $0.6600 level and could slip below the previous support level of $0.6500 later in the week. New Zealand government bonds eased, sending yields 1.5 basis points higher at the long end of the curve. Australian government bond futures were little changed. The three-year bond contract dipped 1 tick at 97.900, while the 10-year contract was steady at 97.1250. The 20-year contract added half a tick to 96.6350.