The Australian and New Zealand dollars fell after peace talks to resolve the war in the Middle East collapsed, while the US’ planned blockade of Iranian ports sent oil prices and bond yields higher.

The Aussie hit an intraday low of $0.6979 before recouping some losses to be last down 0.5 per cent at $0.7035. It rallied 2.7pc last week, the biggest weekly gain in almost three months, but resistance is heavy at 71 cents.

The kiwi dollar was down to $0.5790 but trimmed most of the losses to be last off 0.3pc at $0.5823. Having gained 2.8pc last week, support is solid at 58 cents, after its central bank turned hawkish amid a spike in fuel costs.

Joseph Capurso, head of international economics at the Commonwealth Bank of Australia, said the Australian dollar was ripe for a downward correction as hopes of a quick end to the Iran war could be misplaced.

“We are not surprised an agreement was not reached quickly … We expect talks to resume again this week,” he said.

“The two-week ceasefire may be extended to accommodate further talks.”