Aussie, NZ dollar saddled with euro debt worries

WELLINGTON/SYDNEY: The Australian and New Zealand dollars nursed hefty losses on Tuesday, as the initial relief generated by the euro zone fiscal deal was doused by warnings from ratings agencies.

The Aussie at $1.0066, having fallen 1.5 pct on Monday. Traders say currency primed to test key support at $1.0023, the 50 pct retracement of the $0.9664-$1.0382 move, ahead of another major barrier at $0.9944.

The NZ dollar at $0.7627, having slipped to a two-week low of $0.7610, from $0.7720 in late Monday trade. Kiwi support seen around $0.7577, then $0.7511, with $0.7760 capping the topside.

Market tension flared offshore after rating agencies warned that last week's EU summit, billed by some as a last chance to save the euro, has not gone far enough to ease immediate concerns on the region's debt markets.

Soft Asian stocks weigh on risk currencies with bourses in Japan, Australia, and Korea more than 1 pct lower.

Aussie briefly touched a two-week trough of $1.0030 on reports China won't help the EU without meeting certain conditions and guaranteeing investments.

Antipodeans feel the heat of risk aversion against the safe-haven yen and pound, slipping more than 1 pct, while holding steady against a depressed euro.

Australia business conditions improved modestly in November while confidence held steady in the face of Europe's debt crisis, a private survey showed, suggesting the economy should enjoy solid growth this quarter.

Despite concerns about global growth, Australia's resource forecaster revised up its forecasts for exports earnings from iron ore in 2010/12. It sees total exports of resources worth A$206 bln in the year, up 15 pct.

Australia Q3 dwelling unit starts slipped 6.8 pct, though from an upwardly revised level in Q2.

Kiwi unmoved after dairy giant Fonterra raises its forecast payout for the current season by 20 cents because of a modest recovery in dairy prices.

NZ food prices up 0.2 pct, first rise in four months in Nov. Markets relaxed on inflation, with swap pricing implying 20 pct risk of a 25 bps cut next month and 7 bps next year.

Against the kiwi, the Aussie steady at NZ$1.3181.

NZ government bonds gain from safe haven bid sending yields 2 to 5 basis points lower along the curve.

Aussie debt futures firmer with the three-year contract up 0.05 points to 96.895, and the 10-year contract 0.055 points to 96.125.