WELLINGTON/SYDNEY: The Australian and New Zealand dollars nursed heavy losses on Friday as markets braced for a crucial EU summit, after risk trades were spooked by the ECB's reluctance to embrace bold action to contain the euro zone debt crisis.
* Aussie last at $1.0165, having shed more than 2 pct to a trough of $1.0145, from an overnight session high around $1.0380.
* It hit the high after an expected ECB rate cut, but quickly shed those gains after the ECB president doused hopes the bank would massively step up buying of government bonds.
* Further adding to the gloom, a senior German source said Germany rejected some measures in draft conclusions from a summit of EU heads on Thursday, including giving the European Stability Mechanism a banking licence and issuing common euro zone debt.
* Support for the Aussie now seen around $1.0150, then $1.0130, while $1.0234 is expected to cap the upside.
* Aussie was already under pressure after local data on Thursday showed the economy lost a net 6,300 jobs in November, confounding forecasts of a 10,000 increase.
* NZ dollar trades at $0.7721. It slumped more than 2 pct to a low of $0.7712, from a high around $0.7879 overnight.
* Kiwi seen trapped in a bearish pattern, and may head for $0.7712, while resistance is pegged at $0.7879.
* Kiwi little moved on Thursday, when the RBNZ kept rates on hold. The bank dropped an explicit reference to higher rates contained in previous statements and said its forecasts pointed to a "gentle rise" in rates from mid 2012.
* Risk sentiment cautious ahead of the EU summit. As French President Nicolas Sarkozy says: "If there is no deal on Friday, there will be no second chance."
* Wall Street and commodities fell on Thursday, with the CRB commodity index down 0.7 percent. Gold and copper also fell.
* No major data due in Australia Friday, while NZ expects electronic card retail sales and a consumer confidence survey.
* Aussie debt futures rise with the three-year contract up 0.06 points at 96.900, and the 10-year contract 0.08 points higher at 96.120.
* NZ government bonds also rise, with local yields down 1 bp along the curve.
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