WELLINGTON/SYDNEY: The Australian dollars was under pressure on Tuesday as the market remained deeply divided on the chance of a cut in interest rates from the Reserve Bank of Australia (RBA) later in the session.
The Aussie eased to $1.0252, from $1.0284 late locally on Monday. It again tested major support around $1.0222 overnight but bids held for the moment.
Aussie seen vulnerable ahead of the RBA's rate decision at 0430 GMT. A rate cut not expected by most analysts, but financial markets imply a 50-50 chance of a quarter point easing to a record low of 2.75 percent.
If it were to cut, the Aussie could well breach support in the $1.0200/22 zone and head toward $1.0100. No easing should see a short-covering rally toward $1.0323.
The New Zealand dollar at $0.8510 from Monday's late local level of $0.8545. It traded $0.8486 to $0.8550 overnight.
Kiwi seen driven by broader events and likely to follow the Aussie. Support seen at the overnight low of $0.08486 with $0.8550 the near term resistance.
The dollar rises against the yen for a third straight session and looks set for another stab at the key 100 yen mark as last week's better-than-expected US labour market data calms US economic growth concerns.
The euro slips after European Central Bank President Mario Draghi said the bank is closely watching incoming data and is ready to take further action if needed to address economic weakness. Draghi hinted last week at the possibility of negative deposit rates.
Before the RBA rate decision Australia has figures on international trade and house prices.
New Zealand has wages data with expectations for a modest rise in pay rates, which would not threaten the benign near term inflation outlook or the central bank's on hold policy.
Later this week there is employment data on both sides of the Tasman, with expectations for modest job growth and steady jobless rates.
Australian debt futures largely flat, with the three-year contract steady at 97.440 and the 10-year contract down 0.005 points to 96.875.
New Zealand government bond yields also quiet with a hint of a bid tone.
<Center><b><i>Copyright Reuters, 2013</b></i><br></center>
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