The Aussie fell back to $ 0.7249 from a six-week high of $ 0.7276, but failed to maintain a move above chart resistance around $ 0.7275. A clear break would open the way at $ 0.7368, while support is around $ 0.7196 and $ 0.7083.
That left the currency down 5.8% for the year and well below its February high of $ 0.8007.
The Kiwi Dollar rose to $ 0.6830 after peaking at $ 0.6857 overnight, just below the resistance at $ 0.6867. This was up from the recent 13-month low of $ 0.6702, but again far from its 2021 high of $ 0.7463 and down 4.9% on the year.
The sentiment was tested by a shock wave of 21,151 cases of new coronavirus cases in New South Wales, double the previous day’s total and down from just 200 earlier this month.
The jump was likely to hurt consumer confidence and spending, with numerous media reports of mass restaurant and vacation cancellations.
Analysts will be eager to see data on bank card spending over the next two weeks to assess the damage done. Retail sales had been strong in November and December, so a slowdown would come as no surprise.
Any lasting weakness would challenge the Reserve Bank of Australia’s (RBA) optimism on the economy and complicate the decision to end its bond purchases in February or extend them until May.
The central bank is expected to make the call at its next policy meeting on February 1.
The bond market has already taken into account the end of the AU $ 4 billion per week program with three-year yields rising to 0.90% from 0.20% last September.
10-year paper yields have stabilized around 1.63% in recent weeks, from an all-time low of 1.05% in August, but well below the 2021 peak of 1.997%. (Reporting by Wayne Cole; editing by Richard Pullin)