SYDNEY, July 26 (Reuters) - The Australian dollar slipped on
Monday, knocking its kiwi counterpart lower, as the country's
largest cities remained under strict lockdowns amid rising cases
of the highly contagious COVID-19 Delta variant.
The Aussie fell 0.12% to $0.7356, after dropping to
a near eight-month low of $0.72895 last week when over half the
country's population were under say-at-home orders to combat the
spread of the virus.
"Heightened fear of the delta variant/ rising case counts
and the increasingly severe lockdowns across Australia, plus
risks the RBA ups quantitative easing...all point to a possible
Australian dollar extension down towards $0.7200-$0.7225 over
the next few weeks," Westpac strategists said in a note.
Lower iron ore prices and the possible strengthening in the
U.S. dollar on the possibility of the Federal Reserve moving a
step closer to tapering at its two-day policy meeting this week
could also be a drag for the Aussie, analysts said.
The kiwi dollar also fell 0.18% to trade at $0.6965
, having buckled to an eight-month trough of $0.6882
The currency faces strong resistance around the $0.70 area,
but the mid-term outlook remains positive given the strength of
its economy, which has prompted the Reserve Bank of New Zealand
to signal interest rate hikes.
"While global equity market sentiment is elevated, COVID
risks persist and New Zealand's vaccination rate remains low,"
Westpac analysts added.
Australia and New Zealand have had relatively few COVID-19
infections and deaths compared with other developed countries,
but their respective vaccination rates of about 16% and 12%
remain stubbornly low.
Australian bonds were little changed, with the yield on the
10-year government benchmark stable at 1.19%, down
from 1.49% on July 1. The three-year bond yield was also little
changed at 0.274%.
Across the Tasman sea, New Zealand bonds were
slightly stronger, pushing yields 2-to-3 basis points lower
across the curve.
(Editing by Sam Holmes)