Aussie, NZ dollars nurse losses; take China data in stride

WELLINGTON/SYDNEY: The Australian and New Zealand dollars nursed losses on Tuesday, having suffered steep declines overnight as optimism dimmed on the euro zone after Germany's finance minister warned against hopes for a quick fix to Europe's debt problem.

The Aussie, which dropped more than two full cents to a low of $1.0148 overnight, last traded at $1.0200 . On Monday, it hit a high around $1.0372, up some 10 percent from a one-year trough of $0.9388 on Oct 4.

"Given the speed of the move up last week, it should be reasonably supported on dips," said Paul Kammel, head of client management at Travelex.

"It just depends how severe the news is from offshore. The big event into the weekend is what Europe comes out with in terms of the stabilisation package."

Hopes had mounted that European leaders would detail a comprehensive plan to tackle the region's debt crisis and recapitalize their banks. But Germany on Monday warned that a summit of EU leaders on Sunday would not produce a miracle cure for the euro zone's sovereign debt crisis.

Australia's central bank also noted increasing uncertainty about both the prospects for resolving the euro zone's debt problems and the outlook for global growth in minutes of its October meeting.

The minutes showed the RBA was getting less worried about domestic inflation, which could offer scope for a cut in rates if needed.

Interbank futures imply a two-in-three chance of a 25 basis-point rate cut at the upcoming policy meeting on Nov. 1.

Australian debt futures rose, recouping almost all of the previous day's losses. The three-year contract climbed 0.07 points to 96.140, while the 10-year gained 0.080 points to 95.475.

There was some relief that a flood of Chinese data suggested the world's second biggest economy was on track for a soft landing. China is Australia's largest export market and news about its economy can move the Aussie dollar.

China's gross domestic product rose 9.1 percent in the third quarter from a year ago, moderating from 9.5 percent in the second quarter.

The New Zealand dollar also edged up to $0.7922, after sliding from a near one-month high of $0.8068 to an early low of $0.7910.

"We saw pressure after the Chinese data, but it's still a consolidating market after sharp gains from last week," said ASB Bank head of institutional FX sales Tim Kelleher.

He said the kiwi remained on the defensive, but was likely to see strong support at $0.7850 as buyers emerged on dips.

The Reserve Bank of New Zealand said the rebuilding of quake-hit Christchurch will give the economy a significant lift over the next five years, but will also add to inflationary pressures and make low rates "inappropriate". See

Market pricing imply the official cash rate will stay at 2.5 percent at next week's review, with 34 basis points worth of tightening over the next 12 months.

The Antipodeans pared losses against the yen, with the Aussie last around 78.39 yen , after falling 2 pct from a one-month high of 80.27. Kiwi was last around 60.83 yen , after skidding 1.7 pct from near one-month high at 62.46.

Against the kiwi, the Aussie edged higher to around NZ$1.2872 from NZ$1.2825.

The New Zealand government debt rallied along with US Treasuries, pushing local yields down as much as 4 basis points.