SYDNEY (Reuters) - The Australian and New Zealand dollars had a firmer tone on Monday as Chinese efforts to steady its yuan helped stem speculative selling, at least for now.
The Aussie dollar <AUD=D4> was hovering at $0.7401 having bounced from a $0.7348 low on Friday. The currency has oscillated between support around $0.7310/18 and resistance at $0.7465/84 for more than seven weeks now.
The latest bounce came as the U.S. dollar took a knock from payrolls numbers that missed market expectations, though the overall report was still upbeat.
The Aussie also caught a bid against the euro, which dropped almost 0.7 percent on Friday to its lowest in around six weeks at A$1.5605 <EURAUD=R>.
Aiding the Aussie had been efforts by China's central bank to stem a slide in its yuan.
The Chinese currency rebounded from a 15-month low on Friday after the PBOC raised its forward reserve requirement ratio to 20 percent for financial institutions settling foreign exchange forward yuan positions.
The action makes shorting the yuan more expensive for speculators and the currency was firmer on Monday around 6.8090 per dollar <CNY=CFXS>.
Investors often short the Aussie as a liquid proxy for the yuan, reflecting China's importance as Australia's single biggest export market.
"The PBOC signalled it was getting uncomfortable with speculators seeing the currency as a one-way bet," said NAB senior economist David de Garis. "It was not surprising then that the AUD recovered back up through $0.7400."
"Barring new announcements on the tariff and trade front – a possibility that the market is alert to – this is likely to limit the downside of the Aussie for now."
Lurking in the background were concerns about Sino-U.S. trade relations with Beijing last week announcing retaliatory tariffs on $60 billion of U.S. goods.
The New Zealand dollar <NZD=D3> followed much the same pattern as the Aussie, holding at $0.6753 after bouncing from $0.6721 on Friday.
Both the Reserve Bank of Australia (RBA) and the Reserve Bank of New Zealand (RBNZ) hold policy meetings this week and are considered certain to keep interest rates at record lows.
For the RBA, Tuesday will mark two years since it last altered policy - easily the longest period of stability since it formalised the cash rate in 1990.
Analysts polled by Reuters see little chance of a hike until well into next year, while the futures market implies around a 50-50 probability by August 2019.
Australian government bond futures were firmer on Monday, with the three-year bond contract <YTTc1> up 2 ticks at 97.870. The 10-year contract <YTCc1> rose 3 ticks to 97.3000.
New Zealand government bond yields <0#NZTSY=> were down 2 to 3 basis points across the curve.
(Editing by Shri Navaratnam)
