The Australian and New Zealand dollars looked set on Tuesday to round off their worst monthly fall in months as sliding Chinese shares and an embattled euro led edgy investors to sell risky assets.
By early evening, the Australian dollar was on the defensive at $0.9614, about mid-way between an eight-week low of $0.9568 hit overnight and the day's high of $0.9659.
Immediate support was pegged at the overnight low, a break of which may pave the way for a fall to the October low of $0.9541.
"We are heading into a period of risk-off," said Robert Rennie, an analyst at Westpac. "Even though in the medium-term this dip is a good buying opportunity, I would be surprised if we don't see lows of $0.9200-$0.9300 by December."
For all of November, the Aussie dollar lost 2.4 percent, its biggest drop in any month since May. The retreat, initially driven by profit-taking, gained speed after Europe's nagging debt problems gave investors more reason to shun risk.
An over 3 percent slide in China shares on Tuesday also did little for the mood. Cash-strapped Chinese banks and brokerages were said to be selling shares to raise money in the face of tighter monetary conditions.
Still, some thought the latest pull-back meant it was a good time to buy the currency given Australia's resilient economy would likely see more interest rate hikes next year.
Indeed, domestic data showed exports were less of a drag on growth last quarter than many feared.
Analysts now expect Wednesday's growth report to show the economy grew 0.5 percent in the third quarter, lifting growth from a year ago to a robust 3.5 percent.
NZ$ HITS ONE-MONTH LOW
The New Zealand dollar revisited the one-month low of $0.7429 plumbed overnight, testing support at $0.7430, as the decline in Chinese stocks and fears of further tightening eroded confidence.
The kiwi is now seen as likely to test support levels around $0.7400, last seen in early October.
"Should risk aversion continue to befoul global sentiment, we could see the NZ dollar push through the bottom-end of this range this week," said Bank of NZ strategist Mike Jones. He added the kiwi's current level is broadly consistent with its fundamentals.
For the month, the kiwi dollar shed 2.6 percent, its biggest monthly decline since August.
Data showing new house NZ building approvals fell 2 percent in October added to the picture of a weak housing sector in a patchy economic recovery, which offers no reason for the central bank to resume rate rises any time soon.
The Reserve Bank of NZ is seen holding its cash rate at 3 percent at its final review for the year next week, and likely to leave them there until March next year at least.
NZ swap yields trim their rise to less than 1 basis point higher, while bond yields stay flat.
Both currencies edge lower against the yen, with the Aussie at 80.83 from 81.23 yen , with the Kiwi at 62.50 from 62.78.
Aussie slightly outperforming the kiwi, rising to NZ$1.2917 .
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