Australia, NZ dlrs ease after U.S. jobs report

SYDNEY, Sept 6 (Reuters) – The Australian and New Zealand dollars eased on Monday after data on Friday showed the world’s largest economy created the fewest job in seven months in August, but trade was expected to be subdued ahead of a Reserve Bank of Australia policy decision.

The Australian dollar was 0.15% lower at $0.7437 but remained near a two-month high of $0.74775 touched in the previous trading session.

Data on Friday showed U.S. nonfarm payrolls increased by 235,000 jobs last month, the smallest gain since January, as hiring in the leisure and hospitality sector stalled amid a resurgence of COVID-19 infections, though other details of the report were fairly strong.

“AUD will remain largely driven by U.S. dollar direction this week and the outlook for FOMC tapering,” analysts at Commonwealth Bank of Australia said in a client note.

Trading volumes would remain low with U.S. markets closed for the Labor Day holiday, traders said, while investors were also looking ahead to the Reserve Bank of Australia’s monetary policy decision on Tuesday.

Most analysts polled by Reuters expect the RBA to leave the cash rate at 0.1%, but are split on whether the central bank will delay tapering plans as the economy struggles with the fallout of lockdowns in various states.

If the RBA sticks to its plans to taper bond purchases, the Aussie could temporarily jump higher, analysts said.

The risk-sensitive currency has support at $0.7400 and $0.7350, and could also benefit from record dividend payments from mining companies in the short-term.

Across the Tasman sea, the kiwi fell 0.29% to $0.7141, but remained close to its highest level in nearly three months hit on Friday at $0.7170.

New Zealand reported 20 new cases of COVID-19 for a third day in a row on Monday, ahead of a government decision on whether to lift restrictions enforced in most of the country.

New Zealand government bonds traded lower, pushing yields 3 to 4 basis points higher across the curve.

Yields on Australia’s 10-year paper also rose 3 basis points to 1.264%.

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