Tuesday, 06 November 2012 04:29
WELLINGTON/SYDNEY: The Australian and New Zealand dollars were firm but marking time on Tuesday as investors tensed to see if the Reserve Bank of Australia (RBA) would cut interest rates, in what was expected to be a close decision.
* The RBA announces the outcome of its monthly policy meeting at 0330 GMT and the market is divided on whether it will hold steady or cut by 25 basis points to 3 percent, matching the record low hit during the global financial crisis.
* A majority of analysts in a Reuters poll expect a cut , but investors are more circumspect pointing to recent signs of economic stabilisation in China and the United States.
* Interbank futures imply a 44 percent chance of a cut, while swap rates show a probability of 51 percent. An RBA decision to hold rates may see the Aussie test $1.0420, while a cut could trigger a fall towards $1.0300.
* Early Tuesday, the Aussie was holding around $1.0364, little changed from Monday's late local level, after trading a tight overnight range.
* Support for the Aussie is seen around $1.0320, the Oct 30 low and 20 day moving average, with resistance at $1.0400.
* The New Zealand dollar at $0.8240 against Monday's late local level of $0.8255, and like the Aussie, a tight overnight range.
* Kiwi support seen at $0.8220 with solid resistance at Friday's high of $0.8289.
* The euro falls to a near two-month low against the US dollar on uncertainty over a Greek vote on Wednesday on reforms needed to secure international aid, with signs the austerity package may struggle to get passed.
* Technical outlook for the euro also seen bleak after the currency breaks below its 200-day moving average, suggesting further near-term losses.
* The neck and neck US Presidential election was keeping investors wary and encouraging flows into the safe-haven US dollar.
* The Aussie drew some support from the mixed bag of data on Monday which showed a pick-up in retail sales and roaring demand for new vehicles, but weakness in labour demand and export earnings capped gains.
* Important Australian jobs report due on Thursday with expectations of no job growth and a tick up in the jobless rate.
* New Zealand third quarter wages and labour market data due later on Tuesday, with expectations for a moderate 0.5 percent rise in wages, consistent with the broader benign inflation backdrop.
* Europe gives further ground to sit around one-month lows against the Antipodeans, dipping 0.4 percent on the Aussie to A$1.2341 and 0.2 percent lower on the kiwi to NZ$1.5506.
* Aussie extends its bounce on the kiwi to NZ$1.2560 from a two-week low of NZ$1.2495 set on Friday. A rate cut by the RBA might trigger a test of NZ$1.2360, a one-year low hit last month. If rates are left unchanged, the Aussie might climb to NZ$1.2640.
* Aussie government bond futures were a shade firmer in line with Treasuries. The three-year contract was indicated up 0.02 point at 97.440 and the 10-year contract 0.03 points higher at 96.955.
* New Zealand government bond prices a touch firmer at short end, but flat elsewhere.
Copyright Reuters, 2012