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AUD, NZD Slip as Investors Cut Risk on Virus Curbs

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SYDNEY, May 17 Reuters The Australian and New Zealand dollars weakened against the greenback on Monday, as investors became cautious and cut down on risk amid worries about increasing coronavirus restrictions in Asia and rising U.S. inflation.

The Australian dollar was down 0.31 to 0.7755, as investors took shelter in its U.S. counterpart amidst lower commodity prices and virus outbreaks in Singapore and Taiwan where COVID19 had been contained and both of which placed new curbs on economic activity and movement of people.

The risksensitive Aussie has support at 0.7720, although it broke the level on Friday. Resistance sits at about 0.7786.

The kiwi shed 0.47 to 0.7216 after closing last week 0.41 lower at 0.7250. It has support at 0.7199 and faces resistance near the 0.7250 level.

Both currencies have also been hit by risk aversion in recent days after a startlingly strong reading for U.S. inflation sparked speculation the Federal Reserve might have to start tapering earlier than thought.

Local economic data will be more important for AUD this week, said Commonwealth Bank currency strategists, adding the Aussie could reverse some of the losses if wages and employment numbers due later this week surprise on the upside.

Furthermore, the bank expects the U.S. dollar to resume its downtrend this week now that the market has digested last weeks high inflation reading for April and as the U.S. Federal Reserve keeps rates low.

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