Updates prices as key support levels broke

By Stella Qiu

SYDNEY, June 23 (Reuters) - The Australian and New Zealand dollars slid with global stocks on Monday, hitting one-month lows, as investors feared Iran may retaliate against U.S. strikes on its nuclear sites and raise the stakes in a widening war in the Middle East.

Investors were anxiously waiting to see if Iran would retaliate with the closure of the Strait of Hormuz through which around 20% of the world's daily oil and gas demand flows, with resulting risks to global activity and inflation.

The Australian dollar AUD=D3 slid 0.8% to $0.6402, the lowest since May 20. It broke support at the 200-day moving average of $0.6423, which opened up the downside to as far as $0.6360, the low from early May.

The kiwi NZD=D3 was similarly down 0.8% to $0.5917, the lowest since May 23. It broke support at $0.5926, with bears now eyeing the 200-day moving average of $0.5859.

The commodity-sensitive currencies often track global risk sentiment and tend to take a hit when equity markets slide.

Joseph Capurso, head of international economics at the Commonwealth Bank of Australia, expects the Aussie could test $0.6307 and possibly $0.6157 this week, depending on whether the Middle East conflict escalates.

"We expect these moves will start small in the Asia session and expand in the London session, unless there is soothing news from Iran or the U.S.," said Capurso. "We expect intraday trading ranges to be wide this week."

Down Under, Australia will publish the monthly inflation reading for May on Wednesday. Expectations are centred on an annual rise of 2.3%, slowing from a gain of 2.4% in April. That is the last major data point before the Reserve Bank of Australia's policy decision on July 8.

A strong result could upset market betting for a cut next month, which is currently priced at 78%. 0#AUDIRPR

New Zealand will publish trade data on Wednesday. Its economy grew faster than expected in the first quarter, supporting the case that the central bank is nearing the end of the easing cycle.

Markets see scant chance of the Reserve Bank of New Zealand cutting its 3.25% rate in July, though the probability of an August move is above 60%. 0#NZDIRPR

"A solid cyclical upswing appears to be underway in New Zealand, supported by sharply lower interest rates and a strong rise in dairy exports," said Paul Bloxham, chief economist, Australia, NZ & Global Commodities at HSBC.

"Australia's growth remains hamstrung by a constrained supply-side and weak productivity. Trans-Tasman divergence continues."

(Reporting by Stella Qiu; Editing by Sonali Paul)

((yifan.qiu@thomsonreuters.com))