The Australian and New Zealand dollars backtracked on Monday on reports the White House was considering new curbs on Chinese investment in the United States, another potential escalation in global trade tensions. The Aussie dollar dipped to $0.7425, having been as high as $0.7443 at one stage. That was still up on late week's one-year trough of $0.7345, hit after President Donald Trump announced new tariffs on imports from China and Europe.
The kiwi dollar eased a touch to $0.6900, but again stayed well above last week's $0.6826 low. In the bond market, yields eased amid jitters over Sino-US trade relations. New Zealand government bond yields were down 2 to 3 basis points.
Australian government three-year bond futures firmed 1 tick to 97.890, while the 10-year contract added 2 ticks to 97.3600. The latest report from the Wall Street Journal said Trump planned to bar many Chinese firms from investing in US technology and block more technology exports to the Asian giant.
The news knocked US stock futures down 0.5 percent and chilled risk appetites generally.
"Trump will not be satisfied with the US trade position anytime soon - indeed most likely not at all during his presidency," warned Westpac senior currency strategist Sean Callow.
"Moreover, his aggressive trade policy is consistent with his election campaign and there is no sign that it is costing him any support in his political base."
The report overshadowed news China's central bank would cut the amount of cash that some banks must hold as reserves by 50 basis points (bps), releasing $108 billion in liquidity into the system.
China is Australia's biggest export customer so anything that might support demand there is considered positive for trade flows and the Aussie. Also providing some support was market positioning.
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