A$, NZ$ bounce on better sentiment, stg slide

WELLINGTON/SYDNEY: The Australian and New Zealand dollars were firm on Wednesday as a strong German business survey lifted sentiment in global equity markets while the British pound took another beating.

Market wary ahead of a speech by Reserve Bank of New Zealand governor Graeme Wheeler, in which he is expected to touch on the exchange rate.

The Aussie pushes up to $1.0351, from $1.0325 in late local trade on Tuesday. It ranged $1.0321 to $1.0368 overnight. Support seen at $1.0320, the 200-day moving average, with resistance initially around $1.0375 and then $1.0400.

The New Zealand dollar shrugs off a brief scare about contaminated New Zealand milk powder in China and rises to $0.8470 from $0.8436 late on Tuesday.

Kiwi hit a low of $0.8405 until the milk reports were clarified. NZ milk giant Fonterra, the world's largest dairy exporter, said none of its products were involved in the issue, which was about the packaging of a small amount of produce rather than contamination.

Kiwi further lifted by a 3.1 percent jump in prices at Fonterra's latest auction, the strongest in five months. Support for NZD seen at the Tuesday's low of $0.8405 with resistance initially at $0.8500 and then $0.8520.

Both currencies aided by heavy selling of sterling, partly on persistent rumours the UK may lose its triple A credit rating. Pound falls 0.8 pct to A$1.4896, lowest since last August.

Iron ore prices continue their strong run to $157.20 a tonne, not far from January's peak at $158.50. The steel-making mineral is Australia's single biggest export earner.

Australia has Q4 wages data, while NZ has Q4 producers price index.

The yen regains a little ground on the US dollar and euro as disagreement between Japanese officials raises doubts over how aggressively Japan will ease its monetary policy.

Japanese Finance Minister Taro Aso says he is not considering buying foreign bonds as part of efforts to ease monetary policy, a day after Prime Minister Shinzo Abe said this was an option.

Broad market sentiment lifted by the German ZEW investor confidence survey rising to its highest level since April 2010.

Investors casting wary eyes at Italy's Feb. 24-25 election, with concerns it may fragment the parliament, potentially hampering the country's reform efforts.

The Antipodeans give a little ground against the yen, with the Aussie at 96.75 yen, in sight of a four-year high of 97.42 touched earlier this month. The kiwi at 79.28 after last week's four-year peak of 79.64.

But kiwi still up nearly 22 percent since November and the Aussie up more than 17 percent.

New Zealand government bonds open flat.

Australian government bond futures ease with the three-year contract off 0.04 points at 97.060 and the 10-year contract down 0.030 points at 96.415.