The Australian dollar inched up from six-week lows on Monday helped by a rally in prices for iron ore, the country's top export earner, while its New Zealand cousin consolidated after sharp losses recently.
The Australian dollar AUD=D4 added 0.2 percent to $0.7100, bouncing from Friday's $0.70605 - a level not seen since Jan.4.
The currency stumbled 2.2 percent last week for its worst weekly showing since early October, as traders narrowed the odds on future rate cuts after the country's central bank changed its tune on policy.
"One factor that may have contributed to the small AUD recovery can be attributed to the soaring iron ore price," said Rodrigo Catril, senior forex strategist at National Australia Bank.
"Against a backdrop of soft commodity prices, iron ore prices have continued to climb reaching $94 during the Asian trading session – the highest level in 4-1/2 years," he added.
"China is back from holidays today and it will be interesting to see whether China's iron ore prices reflect a similar jump."
China's Dalian iron ore DCIOcv1 hit limit up at market open on Monday while coking coal jumped 3 percent.
China is Australia's top trading partner and the biggest buyer of its iron ore.
The New Zealand dollar NZD=D4 was last up 0.2 percent at $0.6765 after three straight sessions of losses took it to a nearly three-week trough of $0.6730.
The losses began on Thursday when employment data disappointed, stirring speculation the Reserve Bank of New Zealand (RBNZ) might sound more amenable to a rate cut at its policy meeting on Feb. 13.
The prospect of future rate cuts in Australia and New Zealand sent bonds in both countries rallying last week.
They came off their highs on Monday, with yields on New Zealand government bonds
0#NZTSY= up 1-2.5 basis points across the curve.Australian government bond futures were mixed, with the three-year bond contract YTTc1 off 4 ticks to 98.360. The 10-year contract YTCc1 was flat at 97.900.
