Aussie & NZ dollars out of puff as risk sentiment fades

WELLINGTON/SYDNEY: The Australian and New Zealand dollars nursed losses on Thursday as weak Asian stocks and data showing the euro zone may be sliding toward recession dented risk appetite.

The Australian dollar sluggish at $1.0618, from $1.0639 in NY, having plumbed a two-week trough at $1.0605 overnight. Support seen at $1.0600 with charts pointing south.

Dealers cite option related buyers ahead of $1.0600 and stops eyed below. Resistance found at $1.0655/60 with sellers sighted between $1.0680-$1.0700.

No impact as yet from news Australian Prime Minister Gillard could be challenged for leadership of the Labor party on Monday. The forex and debt market rarely react to political developments in Australia given it is a very stable democracy.

Weak Asian stocks and feeble metal prices weigh on commodity currencies. Appetite for risk was already undermined on scepticism about Greece's ability to implement tough reforms. A drop in China's new export orders in February added to the cautious mood.

The New Zealand dollar slips to $0.8280, pulling further away from a $0.8429 hit on Monday, its highest in nearly six months.

The kiwi struggled broadly, pushing its trade-weighted index down 0.5 percent to 73.24, its lowest in a week. The New Zealand currency has retreated from 74.17 hit earlier this week, its highest since early August.

It remained on the back foot against the Australian dollar at NZ$1.2822, after the Aussie rebounded from a four-month trough of NZ$1.2727 on Wednesday.

Against the yen, Antipodeans off multi-month highs with Aussie last at 85.24 yen, from 86.34 on Monday, its highest since July. The kiwi at 66.45 yen, having retreated from a 6 1/2-month high above 67.00 yen earlier this week.

Aussie and kiwi lose ground to the euro, with euro at A$1.2461, after touching a three-week high at A$1.2475 offshore. Vs kiwi, euro climbs to two-week peak of NZ$1.6006.

The kiwi's inability to hold above US$0.8400, despite a handful of attempts this month, has put the brakes on its rally seen since the start of the year.

The New Zealand currency hovered around key support at $0.8280, the 61.8 percent Fibonacci retracement of its August-November downmove. Market participants say a sustained break below that level could open the door to a further slide.

Some see more support in the mid-$0.8200 region, which has bolstered the currency all month, while a definitive break below that level may make the currency vulnerable to a near-term fall towards $0.8000.

Traders saw upside resistance at $0.8350, around the day's high hit on Wednesday.

New Zealand government bonds trade essentially flat on the day.

Australian government bond prices gain 0.06 points, with three-year future contract at 96.370, and 10-year contracts at 95.910.