By Stella Qiu
SYDNEY, Nov 28 (Reuters) - The Australian and New Zealand dollars took a beating on Monday, as investors ditched riskier assets on concerns that growing protests in China against the government's zero-COVID policy would further undermine the world' second-largest economy.
The Aussie, a liquid proxy for the Chinese yuan, tumbled 1% to $0.6686, having added 1.2% in the previous week on a broadly softer U.S. dollar. It has support at around 66 cents and resistance lies near 68 cents.
The kiwi dollar slid 0.6% to $0.6207, also pulling back from a 1.5% rally last week to the highest since late August, buoyed by expectations that the Reserve Bank of New Zealand would stay aggressive to tame inflation.
"The Aussie has repeatedly failed around 68 cents this month despite the U.S. dollar's wobbles. Weakness in base metals and energy prices already indicated renewed concern over China's economic outlook," said Sean Callow, a currency strategist at Westpac in Sydney.
"China's combination of rising case numbers and an unrealistic goal of stamping out the virus is likely to maintain investor concern near term, even if the protests are reduced with harsh measures," said Callow, adding that the currency is likely to be on the back foot in the near term.
Over the weekend, waves of protests against China's zero-COVID approach spread to many parts of the country as the number of COVID cases continued to hit record highs. That fuelled concerns about the health of China's economy and cast a pall over the global growth outlook.
The offshore Chinese yuan weakened as much as 0.8% earlier in the session, although it has since recouped some of the losses. Chinese bluechips dropped 1.6% while Hong Kong's Hang Seng index fell 2%.
The Aussie did not react much to domestic data on Monday showing that Australia's retail sales suffered the first fall this year, which adds to the evidence that rate hikes were working to cool red-hot demand.
Markets are still wagering on another quarter-point hike to 3.10% at the Reserve Bank of Australia's December policy meeting next week, but trimmed the implied peak for rates slightly to around 3.78% from 3.85% ahead of the retail data.
Australian government bond yields eased slightly. Yields on 10-year bonds fell 4 basis points to 3.548%, leaving the spread over the Treasuries at minus 10 basis points.
Yields on three-year bonds fell 5 bps to 3.224%. (Reporting by Stella Qiu Editing by Shri Navaratnam)