Aussie & NZ dollars slide as investors dump risk

WELLINGTON/SYDNEY: The Australian and New Zealand dollars dived to six-week lows on Thursday as investors slashed positions in a whole range of riskier assets from commodities, to shares and growth-sensitive currencies.

* The Aussie sank over 2 percent to as low as $1.0035, the lowest since Aug 9, before steadying somewhat at $1.0066. It ranged $1.0115 to $1.0292 overnight and had stood at $1.0284 late here Wednesday.

* The risk-off environment, with weak stock markets, likely to keep the pressure on commodity currencies. Aussie has broken through major support levels and next major prop seen at $0.9930 with resistance at $1.0200.

* Dealers say the Aussie was also sold as a proxy for Asian regional currencies which are less liquid and prone to intervention.

* The New Zealand dollar also battered lower returning to local markets at around $0.8010 after touching a low of $0.7996, the lowest since early August. That compares with Wednesday's late local level of 0.8228.

* Kiwi seen supported at $0.7990, with stops at $0.7950 while the break in the trend line at $0.8070 seen as the first line of resistance ahead of $0.8120.

* The dollar gains broadly after the Fed lived up to expectations and said it would shift its portfolio in favour of long term debt, with $400 billion of long term purchases balanced by an equal amount of selling of short dated bonds.

* The plan, dubbed Operation Twist by market participants, aims to lower long term rates and help the housing sector. For details see

* The move nudged up short-term rates, which is seen as dollar supportive, as is the Fed's approach of not boosting money supply.

* Greece outlines more austerity measures to tackle its debt mountain and ensure further bailout funds. International Monetary Fund warns that Europe's sovereign debt crisis risks tearing a giant hole in banks' capital.

* Reserve Bank of Australia's Deputy Governor Ric Battellino says the country can be resilient in the face of a US slowdown and that market pricing of rate cuts is based on a "pessimistic assessment" of economy. See

* Reserve Bank of NZ governor Alan Bollard says rates will be rising but it may take some time, while the high NZ dollar is weighing on demand. See

* Antipodeans take a tumble in crosses, euro at a three week high against the at A$1.3527 and a two week high against kiwi at NZ$1.6999, before trimming gains.

* The Aussie outperforms the kiwi and makes ground on the cross rate to NZ$1.2510 from NZ$1.2487. It had dipped to a six-week low of NZ$1.2343 struck on Monday.

* NZ GDP data later on Thursday, with a Reuters poll forecasting 0.5 percent growth in the second quarter, after a rise of 0.8 percent in the first quarter.

* The data is not expected to shift market expectations for interest rates much, if at all, given that global uncertainty has already put paid to any chance of a hike near term.

Markets are not pricing in a hike until March next year.

* However, markets will look closely at Chinese PMI data due Thursday for the latest snapshot of activity and whether the economy is slowing. China is a key trading partner for Australia and New Zealand.

* NZ government bonds rally in line with US Treasuries with local yields 3.5 basis points lower across the curve.

* Australian bond futures rise strongly, with the three-year contract 0.07 points higher at 96.440 and the 10-year up 0.075 points at 95.850.

Copyright Reuters, 2011