The Australian and New Zealand dollars were stuck near multi-year lows on Monday as higher Treasury yields underpinned their U.S. counterpart while pressuring emerging markets and risk sentiment.
The Aussie dollar AUD=D3 was looking shaky at $0.7055, having hit a 32-month trough around $0.7042 on Friday. The kiwi NZD=D3 touched a new low at $0.6422 and was last at $0.6436.
Neither got much of a lift from China's decision to free up more money for lending by cutting bank reserve requirements over the weekend.
China is Australia's single biggest export market and anything that supports demand there is considered a positive for the Aussie.
"Policymakers are attempting to cushion China's economic slowdown, but more reflationary measures will likely be necessary for AUD/USD to sustain a meaningful relief rally," said Elias Haddad, a senior currency strategist at CBA.
The move was not enough to stop Chinese blue chips from sliding 3.5 percent .CSI300 as the market resumed from a week-long holiday.
One complication was that Beijing's policy easing also tended to undermine the yuan, which in turn pressured other emerging currencies to depreciate to keep exports competitive.
That made it a mixed blessing for the Aussie and the kiwi given investors often short both as a liquid proxy for risk in those same emerging markets.
At the same time the U.S. dollar was gaining an ever-wider interest rate advantage as the Federal Reserve stuck with its tightening campaign.
Ten-year Treasury paper currently pays 46 basis points more than Australian debt AU10YT=RR and 57 basis points over New Zealand paper NZ10YT=RR .
"This is a recipe for a lower NZ dollar," said Jarrod Kerr, chief economist at Kiwibank. "An early target looks like $0.6418 then back to $0.6350, but really when momentum selling is behind the Kiwi it's the falling knife effect."
New Zealand government bond prices
0#NZTSY= slipped in the wake of Treasuries, nudging yields up 2 to 3 basis points across the curve.Australian government bond futures also retreated, with the three-year bond contract YTTc1 off 3.5 ticks at 97.875. The 10-year contract YTCc1 dipped 5.5 ticks to 97.2100.
