SYDNEY (Reuters) - The Australian and New Zealand dollars huddled near recent lows on Monday, as a run of upbeat U.S. economic news underlined the diverging outlook for interest rates between them and their U.S. peer.
The Aussie <AUD=D4> was holding at $0.7675, having dived as deep as $0.7625 on Friday to bring its losses for the month so far to almost 2 percent. Analysts warned a rally above chart resistance at $0.7720/7733 was needed to turn the bear trend.
"Friday's weekly close for AUD/USD beneath both important trend-line support around $0.7700 and the 200-day average at $0.7694 is ominous technically," said Ray Attrill, head of FX strategy at NAB.
The latest lunge lower came after a surprisingly strong reading on U.S. economic growth supported expectations for a December rate hike from the Federal Reserve.
In contrast, disappointingly soft figures on Australian inflation out last week had only reinforced the lack of any trigger for a tightening - likely for many months to come.
Interest rate futures <0#YIB:> are not fully priced for a hike in the 1.5 percent cash rate until February 2019, out from August 2018 just a few weeks ago.
As a result, the premium offered by Australian two-year government debt <AU2YT=RR> over U.S. bonds has shrunk to just 26 basis points, near the smallest since early 2001.
The kiwi dollar has been under much the same pressure, and was down another 0.4 percent on Monday at $0.6840 <NZD=D4>.
It touched its lowest since May last week at $0.6818, which was also its low point for the year so far. A break there would take it to territory last trod in June 2016.
Foreign investors have also been concerned the country's new left-leaning Labour Party government would take a hard line stance on immigration and foreign investment and shake up rules governing the Reserve Bank of New Zealand.
Figures from the Commodity Futures Trading Commission last week showed speculators had sharply increased their short positions in the kiwi, reversing what had been a bullish stance on the currency.
New Zealand government bonds <0#NZTSY=> were little changed on Monday, while Australian debt futures firmed.
The Australian three-year bond contract <YTTc1> rose 1 tick to 97.940, while the 10-year contract <YTCc1> climbed 4.5 ticks to 97.2450 as the yield curve flattened.
(Editing by Jacqueline Wong)
