AUD, NZD fall from highs as USD rebounds

[SYDNEY] The Australian and New Zealand dollars slipped from their peaks on Monday as the greenback bounced from a multi-year trough after North Korea steered clear of escalating tensions at its foundation day over the weekend.

North Korean leader Kim Jong Un hosted a massive celebration on Saturday to congratulate his nuclear scientists and technicians who developed the country's sixth and largest nuclear test a week ago.

Relief that it did not launch another missile as some South Korean officials had warned lifted the US dollar from its lowest since January 2015 against a basket of currencies.

In turn, the Australian dollar fell from a 2.5 year peak of US$0.8125 to US$0.8046.

The Aussie rose one percent last week for its fourth consecutive weekly gain.

Immediate chart resistance lies at US$0.8168 while critical support is seen around US$0.8000.

The Aussie has been on an uptrend since the beginning of June largely as the US dollar went downhill on diminishing expectations of another Federal Reserve hike this year and geopolitical tensions around North Korea.

"AUD/USD has finally, convincingly, broken above US$0.8000 after several failed attempts in recent months," said Joseph Capurso, currency strategist at Commonwealth Bank of Australia.

"This week AUD will be supported by a heavy USD and our prediction of a strong 20,000 increase in Australian August employment."

Australia's jobs growth has accelerated markedly this year to reach an annual two per cent, supporting household incomes and spending in the face of record-low wage rises.

Leading indicators of labour demand suggest this strength will persist for a while yet.

The employment data is due on Thursday.

The New Zealand dollar fell 0.2 per cent to US$0.7249, edging away from a three-week high of US$0.7338 touched on Friday.

The kiwi has gone out of favour, falling in five of the last six weeks ahead of a general election where Labour Party leader Jacinda Ardern is seen toppling Prime Minister Bill English and his National Party.

The kiwi touched a three-month trough of US$0.7132 in August, but has since rebounded on broad US dollar weakness.

"Sentiment toward the USD remains downbeat," ANZ said in a note.

"Locally, general election jitters will continue, and combined with further softening in house prices and dairy futures prices, will cap NZD."

New Zealand government bonds were mixed, with yields up two basis points at the long end of the curve and down one basis point at the short end.

Australian government bond futures slipped, with the three-year bond contract down 2.5 ticks at 97.995.

The 10-year contract fell 3.5 ticks to 97.3900.

REUTERS