SYDNEY/WELLINGTON (Reuters) - The New Zealand dollar held near two-week lows on Monday while its Australian cousin steadied after four sessions of losses as the greenback finally found some favour from an upbeat U.S. jobs report.
The New Zealand dollar <NZD=D4> slipped 0.3 percent to $0.7395, just above last week's trough of $0.7392 - the lowest point since July 21.
The kiwi is still up more than 10 percent in the past three months - a worry for the Reserve Bank of New Zealand (RBNZ) which is all but certain to leave cash rates at a record low 1.75 percent on Thursday. <ECONNZ>
The RBNZ slashed rates three times last year by a total 75 basis points in an attempt to boost consumer prices.
There are growing expectations the RBNZ will attempt to "jawbone" the currency following last month's news of slower-than-expected second quarter inflation.
"Together with the low New Zealand Q2 CPI, the recent lift in the NZD raises the question of whether the RBNZ will talk down the NZD or replace its monetary policy's neutral bias with an easing bias," said Joseph Capurso, rates strategist at CBA.
"We think the RBNZ will do neither, though it is a risk."
An RBNZ survey on Monday showed inflation expectations for two years ahead had slipped to 2.09 percent, from 2.17 percent in the second quarter. The pullback adds to the case for keeping rates low for longer.
The antipodean currencies have soared since June on broad U.S. dollar weakness as a series of poor U.S. indicators added to uncertainty about the Federal Reserve's plan to start shrinking its balance sheet.
But the dollar won a reprieve on Friday when nonfarm payrolls rose by a bigger-than-forecast 209,000 last month, while average hourly earnings increased 0.3 percent.
The Australian dollar stood at $0.7942 <AUD=D4>. The Aussie has climbed over 7 percent in just two months but ran into stiff chart resistance atop $0.8000 late in July and has since struggled around that barrier.
The Reserve Bank of Australia last week warned that further gains in the currency would threaten its outlook for growth and inflation, although it felt current levels were not a major threat.
The only domestic data out on Monday showed Australian job advertisements rose for a fifth straight month, suggesting a strong pick up in employment seen in recent months could run for a while yet.
Australian government bond futures slipped, with the three-year bond contract <YTTc1> down 1 tick at 98.060. The 10-year contract <YTCc1> fell 3.5 ticks to 97.3450.
New Zealand government bonds <0#NZTSY=> eased, sending yields 2.5 basis points higher at the long end of the curve.
(Reporting by Swati Pandey and Charlotte Greenfield; Editing by Eric Meijer)
