The Australian and New Zealand dollars on Monday failed to sustain a recent rally, after traders, cheered by hope the U.S. Federal Reserve might consider less aggressive hikes, shifted their focus back to underlying concerns about global growth.
The Aussie slid 0.6% to $0.6338 AUD= , although it did hit 64 cents for the first time in more than two weeks earlier in the day. Support is at Friday's low of $0.6209.
The currency surged 1.8% on Friday, joining a broad-based risk rally on talk the Fed was debating when to slow the pace of hikes and might signal a step back at its November meeting.
The kiwi dollar was also off 0.2% to $0.5737 NZD= , having also risen 1.2% in the previous session. It is still some distance away from its recent low of $0.5510.
Investors were also concerned about the new membership line-up of China's top governing body, which has heightened fears that President Xi Jinping will double down on ideology-driven policies at the cost of economic growth.
Delayed data on gross domestic product (GDP) showed the Chinese economy grew 3.9% in the third quarter, beating forecasts of 3.5%, but retail sales disappointed with a meagre rise of 2.5%.
The currency markets remained jittery amid signs of intervention from Japanese authorities to support the flailing yen. Early on Monday, the Japanese yen made a thumping 4 yen jump, but struggled to hold its gains against a robust U.S. dollar.
The U.S. dollar made gains against major currencies, with the dollar index =USD up 0.3% at 112.24.
"We expect the USD to track higher towards 114 (points) this week because of an unwind of Friday's almost 6 yen move," Carol Kong, a currency strategist at Commonwealth Bank of Australia, said in a note.
"AUD/USD will this week unwind part of Friday's almost 2 US cents jump following the Japanese authorities' market intervention to support the yen," she said.
In a sign policy makers were unperturbed by a weaker local currency, Reserve Bank of Australia (RBA) Assistant Governor Christopher Kent said that depreciation of the Aussie dollar will only add around 0.2% to consumer inflation.
Australian government bond yields eased following their U.S. counterparts. Yields on 10-year bonds AU10YT=RR edged 6 basis points lower to 4.160%.
Yields on three-year bonds AU3YT=RR fell 15 bps to 3.628%.
