Australia dollar on the defensive as RBA looms, NZD also eases

[SYDNEY] The Australian dollar eased on Monday, succumbing to profit taking after a mixed bag of domestic economic data disappointed some investors.

Muted retail sales, subdued inflation and a survey suggesting labour demand may have peaked all combined to dampen the Aussie, which shed 0.4 per cent to US$0.7642.

"Overall, these figures are consistent with our view that GDP growth slowed in the first quarter of this year," said Kate Hickie, assistant economist at Capital Economics.

"This is unlikely to prompt the RBA to cut rates at tomorrow's meeting, but it increases the chances that it will try to talk the dollar down."

The Reserve Bank of Australia (RBA) holds its policy review on Tuesday and is considered almost certain to keep the cash rate unchanged at a record low 2 per cent.

It is, however, under growing pressure to talk down the Aussie, which last month surged 7.2 per cent to a nine-month high of US$0.7723. The rally was its biggest since 2011.

The Aussie also lost ground against the yen and euro. Versus its New Zealand peer, it shed 0.3 per cent to NZ$1.1090.

The kiwi also consolidated against the US dollar after last week's rally to a nine-month high of US$0.6968. It was down 0.3 per cent at US$0.6888.

Against the yen and euro, the kiwi was just a tad softer.

New Zealand government bond prices edged up, sending yields two basis points lower at the short end and six bps lower at the long end.

Australian government bond futures rose, with the three-year bond contract and 10-year contract both six ticks higher at 98.140 and 97.5350 respectively.

REUTERS