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Australia, NZ dollars near multi-month peaks as USD struggles

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The Australian dollar stood near two-year highs on Monday while its New Zealand counterpart was within kissing distance of an almost 11-month peak against an unloved greenback.

[SYDNEY] The Australian dollar stood near two-year highs on Monday while its New Zealand counterpart was within kissing distance of an almost 11-month peak against an unloved greenback.

The Australian dollar was up 0.1 per cent at US$0.7919, not far from Thursday's peak of US$0.7992 - a level last seen in May 2015. Key chart support lies at Friday's low of US$0.7875.

It climbed 1.1 per cent last week, adding to gains of nearly 3 percent the previous week.

The Aussie had looked set to breach stiff chart resistance of 80 US cents last week, but the Reserve Bank of Australia (RBA) on Friday poured cold water on hawks who were wagering on a rate increase over the near term.

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Market voices on:

Deputy Governor Guy Debelle gave the clearest signal yet that policy rates were set to remain at record lows of 1.50 per cent for a while.

"RBA's Debelle burst the AUD bulls' balloon on Friday," said Stephen Innes, head of APAC trading at OANDA. "We could see a further washout of the short-term long AUD positioning. But with a sagging greenback, it's best to express any Aussie negative bias through the crosses."

The dollar index, which measures the US dollar against a basket of six major currencies, stood around 13-month lows, pressured by political turmoil in the world's biggest economy.

Speculators' bets on the US dollar swung to a net short for the first time in more than a year, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday.

According to the same data, they also increased their net long positions in the Aussie.

The Australian currency wasn't quite as lucky elsewhere. Against the yen, it was set to clock its second straight session of losses, while the euro bounced from a three-month trough. Against the New Zealand dollar, it stood near 1-1/2 week lows.

Domestically, investors will keep an eye on second quarter inflation data due Wednesday, followed by a speech by RBA Governor Philip Lowe. Core inflation - closely watched by policymakers - likely stayed below target for a sixth straight quarter.

Across the Tasman Sea, the New Zealand dollar held at US$0.7439, not far from high of US$0.7460 touched on Friday, which was its highest level since Sept. 8, 2016.

It climbed 1.4 per cent last week, logging its best weekly performance since late May.

New Zealand government bonds were little changed, with yields about half a basis point lower across the curve.

Australian government bond futures gained, with the three-year bond contract up 1 tick at 98.010. The 10-year contract climbed 2.5 ticks to 97.325.

REUTERS

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