SYDNEY, April 8 (Reuters) - The Australian and New Zealand dollars were little changed in cautious trade on Monday after surviving an unexpectedly strong U.S. payrolls report, while a further jump in U.S. yields led markets to pare back rate cut expectations Down Under.
The Aussie AUD=D3 was flat at $0.6580, after gaining 1% last week to clear a major resistance level. It now has support at the 200-day moving average of $0.6545 and resistance is at last week's high of $0.6619.
The kiwi dollar NZD=D3 was also little changed at $0.6016, having risen 0.6% last week to bounce off a five-month through of $0.5940. It now faces resistance around $0.6040.
The two suffered only minor losses on Friday after a surprisingly strong U.S. payrolls report, which had markets betting that a rate cut in June is now only a coin flip, down from 66% a day earlier. The total Federal Reserve easing priced in this year is just 62 basis points (bps).
As a result, investors figured it would be hard for the Reserve Bank of Australia to be cutting interest rates until November this year, while its expected easing this year has been pared back to just 28 bps. That compared with 40 bps two weeks ago.
Local data showed housing finance in Australia rebounded in February, suggesting financial conditions were not as restrictive as hoped by the RBA.
Yields on 10-year Australian bonds AU10YT=RR rose 7 bps to 4.195%, the highest since late February. The three-year yield AU3YT=RR gained 6 bps to a three-week high of 3.764%.
On Wednesday, the Reserve Bank of New Zealand will decide on its latest policy move. Markets have wagered heavily on a hold at 5.5% but will be looking for any signs that could support a cut in August.
They see a total easing of 64 bps from the RBNZ this year, down from 70 bps a week ago.
Nic Guesnon, an economist at UBS, said the RBNZ is facing a dilemma of rising financial stress versus sticky domestic inflation, adding that arrears and non-performing loans are on the rise.
"We think the recent trends in arrears raise the risk of an earlier rate cut (in August). We consider July, August and October in 2024 as live meetings," said Guesnon.
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