The Australian and New Zealand dollars skidded on Monday as the military conflict in the Middle East spurred demand for safe-haven assets, with local bonds getting a respite from selling pressure after a strong U.S. jobs report.
The Aussie AUD=D3 fell 0.3% to $0.6366, having dropped 0.8% last week to a fresh 11-month low of $0.6286, pressured by a steep climb in Treasury yields. It now faces stiff resistance at 64 cents.
The kiwi dollar NZD=D3 is also off 0.3% to $0.5969, after ending last week with a small decline of 0.2%. It has support at the $0.5860 low from early September, while resistance is around 60 cents.
The two currencies will be bracing for another big test later in the day as China's mainland markets return from a week-long holiday. Investors will be keenly awaiting any data shedding light on a much-anticipated rebound in consumer spending.
In the Middle East, Islamist group Hamas on Saturday launched the biggest attack on Israel in years. Israel declared war and retaliated by pounding the Palestinian enclave of Gaza, killing hundreds of people.
The Aussie AUDJPY=R is down 0.4% on the yen to 94.96 yen, while the kiwi NZDJPY=R also eased 0.4% to 89.07 yen.
"The events in Israel over the weekend have sparked some risk aversion in early Asian trade," said Kyle Rodda, a senior financial market analyst at Capital.com. "For those with open positions in the market, there could be ongoing volatility as the situation unfolds."
On Friday, the much anticipated U.S. non-farm payrolls report showed that jobs growth was much stronger than expected, but wage inflation cooled, a mixed result that triggered a late rally in U.S. shares and saw the Antipodean currencies reverse losses.
Australian bonds rallied. Three-year bond futures YTTc1 were up 5 ticks to 96.04, the highest in more than two weeks, while 10-year bond futures YTCc1 rose 3 ticks to 95.475.
