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BR: Australian dollar hurt by commodities, NZ dollar finds post-election respite
 
WELLINGTON/SYDNEY: The Australian dollar plumbed a six-month trough on Monday, weighed by falling commodity and stock prices, while the New Zealand dollars bounced off recent lows following a post-election rally over the weekend.
The Australian dollar matched Friday's low of $0.8920, the weakest since early March, to be last at $0.8930. It has lost nearly 5 cents in two weeks and a break of $0.8891 would target a retracement to this year's trough of $0.8660.
The move lower for the Aussie came after the benchmark Thomson Reuters/Core Commodity CRB Index fell to levels not seen since January, while iron ore prices, Australia's top export earner, touched five-year lows.
Not helping is a large move in the speculative community which nearly halved their Australian dollar long positions. CFTC data showed Aussie net long contracts dropped to 22,140 the week of Sept 16, from over 41,000 the week before.
Much of the downward pressure for the Aussie is due to a rising U.S. dollar as investors repriced the risk the Federal Reserve could start hiking interest rates.
A major focus this week will be on China's flash manufacturing PMI reading on Tuesday, as fears over the outlook for the country's economy mount. The Australian dollar is sensitive to news out of China, its key export market.
"I see a downside risk for the Aussie which could drop to around 89 cents or a touch below," said Joseph Capurso, a strategist at Commonwealth Bank of Australia.
However, he said the U.S. dollar looked overbought and could see a period of consolidation.
Across the Tasman sea, the New Zealand dollar got some reprieve, edging up to $0.8147 from $0.8120 late on Friday, after the country's ruling National party secured a third term in a weekend general election with a promise to continue growth-friendly economic policies.
The kiwi poked up to a two-month high around 89.05 yen , while the Aussie plumbed a six-week low around NZ$1.0950. This helped to push the kiwi up to a one-week high on a trade-weighted basis.
Prime Minister John Key's centre-right National Party won an outright parliamentary majority.
"The result highlights the benefits that an incumbent government can enjoy when its domestic economy records significant out-performance relative to the global growth backdrop," JPMorgan analysts said in a note.
"But given the extent to which markets were discounting risks around a change of government ahead of the election, we think any gains in the NZD will probably be limited."
New Zealand bonds rose on the election result, pushing yields 5.5 bps lower at the long end of the curve.
Still, the kiwi remained near seven-month lows of $0.8078 hit last week, in part due to falling dairy prices, New Zealand's top export. A break below $0.8078 could trigger a test of the year's low of $0.8052, traders said.
"I would have thought we'd see a rise towards $0.8175 or maybe $0.8200 so the rally has been muted," said Tim Kelleher, head of institutional sales at ASB Bank.
"The market is focussing more on more U.S. dollar strength this week," he said, adding that he would sell the currency on a rise to $0.8200.
Investors were anticipating annual results from dairy co-operative Fonterra on Wednesday, as the world's largest dairy exporter is expected to cut its milk payout forecast in the face of lower global prices.
Australian government bond futures bounced from multi-month lows, with the three-year bond contract up 4 ticks at 97.090. It touched a five-month trough of 97.030 last week. The 10-year contract rose 5.5 ticks to 96.290.
Source