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Australia, NZ dollars fall again as greenback rebounds on Irma relief

[SYDNEY] The Australian and New Zealand dollars fell on Tuesday as their US peer staged a broad rebound on improving risk sentiment after Hurricane Irma was downgraded without causing as much damage as feared.

The Australian dollar slipped 0.29 per cent to US$0.8006 for its second straight session of losses. It had climbed to a more than 2-1/2 year high of US$0.8125 last week.

The New Zealand dollar stood at US$0.7250, coming off a one-month peak of US$0.7338 touched on Friday.

Investors had shorted the greenback for the Japanese yen last week on fears about damage to life and property in Florida from Irma, and ahead of North Korea's founding day on Sept 9.

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But Pyongyang marked the anniversary without further missile or nuclear tests and Irma, while hitting heavily populated areas in Florida over the weekend, lost strength and was downgraded to a tropical storm.

"There is no doubt that sentiment has picked-up and implied volatility has moved lower with a certain calmness returning to markets," said Chris Weston, Melbourne-based chief market strategist at IG.

"AUD/USD is also on the radar, as this pair is over-owned in a huge way... with the pair moving into the lower 80c level and the probability that a short-term move into US$0.7950 to US$0.7900 looks ominous."

Local data showed Australian business conditions climbed to the highest since early 2008 in August, with a marked improvement in employment intentions burnishing the outlook for further jobs growth.

National Australia Bank's survey of more than 400 firms showed its index of business conditions firmed one point to +15 in August, triple its long-run average of +5.

The Aussie is up 0.7 per cent so far in September, largely due to losses in the US dollar. For the year, it is up 11.1 per cent, on track for its best annual performance since a 14 per cent gain in 2010.

The kiwi also bounced somewhat in September, after falling 4.4 per cent in August for its worst monthly performance since January 2016.

Investors have been on sidelines recently ahead of New Zealand's general election where opposition leader Jacinda Ardern is neck-and-neck with Prime Minister Bill English for the top job.

New Zealand government bonds slipped, sending yields two basis points higher at the long end of the curve.

Australian government bond futures fell too, with the three-year bond contract down one tick at 98.000. The 10-year contract slipped 2.75 ticks to 97.37.

REUTERS