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Australia, New Zealand dollars near one-month lows as greenback bounces

[SYDNEY] The Australian and New Zealand dollars stood near one-month lows on Wednesday against a buoyant US dollar after solid retail sales data revived the risk of another Federal Reserve interest rate hike this year.

The Australian dollar went as low as US$0.7808 overnight, a level not seen since July 18. It last stood at US$0.7831.

The Aussie has been on a downtrend since hitting a two-year peak of $0.8066 in late July. It is off about 1.7 per cent in the last three weeks.

The New Zealand dollar sank to US$0.7224, the lowest since July 12. The kiwi has also faltered after hitting a two-year high of US$0.7557 on July 27.

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The falls have come on the back of a rebound in the greenback helped by a burst of strong data. US retail sales jumped 0.6 per cent in July, handily beating economists' estimate of 0.4 per cent and the biggest gain in seven months.

Attention will now shift to minutes of the Fed's July meeting due later in the day for clues on the timing of rate hikes as well as whether it is likely to announce a reduction in its balance sheet at its September meeting.

In Australia, investors will watch for domestic jobs data on Thursday for evidence that a revival in full-time work seen since the start of the year is continuing.

Data on Wednesday showed Australian wage growth languished at record lows at the end of June quarter, an outcome that threatens to sap consumer spending by heavily indebted households and drag on already-anaemic inflation.

In New Zealand, prices for dairy - New Zealand's top goods export - fell at the latest fortnightly auction.

Prices for whole milk powder, a key export-earner, fell 0.6 per cent, missing futures market pricing of a roughly 4 per cent rise.

"The latest GDT dairy auction defied some of the more positive indicators leading up to the auction and showed a slight fall in pricing. But much of the damage to the NZD was done prior to that," said Jason Wong, currency strategist at BNZ, adding that the US dollar was in the "box seat".

New Zealand government bonds gained, sending yields 1 basis point lower at the long end of the curve.

Australian government bond futures eased, with the three-year bond contract down 2 ticks at 98.020. The 10-year contract was off 2 ticks at 97.3350.