SYDNEY/WELLINGTON: The Australian and New Zealand dollars held near record highs versus the euro on Thursday, ahead of a European Central Bank policy meeting where a cut to interest rates is widely expected to help spur a region facing the risk of a deep recession.
The euro trades at A$1.2211, having come within a whisker of its February trough at A$1.2124 overnight. It buys NZ$1.5610, after falling to a lifetime low around NZ$1.5540.
Market participants say the euro could fall further, particularly against the Antipodean currencies, if the ECB announces a bigger-than-expected rate cut later in the day, or delivers more stimulus that will help shore up risk sentiment.
Against the greenback, the Aussie is at $1.0259, not far off a two-month peak of $1.0320 set overnight. The kiwi is at $0.8023, having touched a two-month high at $0.8065
Kiwi holds above key technical support at $0.8014, its 100-day moving average. Strong resistance is seen around $0.8060, a trough hit in March. Traders say a clear break above that level is needed for the kiwi to push higher.
Aussie has good support at $1.0256/57, the 100-/200-DMA, ahead of $1.0146, the 23.6 pct retracement of its June rally.
Australian trade numbers showed a smaller-than-expected deficit of A$285 mln, Thanks in part to a record month of exports to China.
Investors reluctant to do much ahead of the ECB and a separate meeting at the Bank of England as well as key US job data on Friday.
Pressure on the ECB to ease policy has gathered pace with the euro area facing deep recession as tight credit conditions add to fiscal tightening and austerity.
NZ government bonds firm a touch, prodding yields 2 bps lower along the curve.
Australian government bond futures also higher with the three-year contract up 0.06 points at 97.520 and the 10-year also 0.06 points higher at 96.955.
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