WELLINGTON/SYDNEY: The Australian and New Zealand dollars hovered near two-month lows against the euro, which stayed firm on Wednesday as investors clung to hopes that policymakers will finally take concrete steps to tackle Europe's debt crisis.
The euro rises as high as NZ$1.5628, highest since July 5, having jumped 1 pct overnight. Likewise, it reaches A$1.2123 against the Aussie, with charts pointing to A$1.2140 as the next big target.
The euro benefits from a wave of short covering on hopes of bond-buying by the European Central Bank (ECB) to contain the debt crisis and expectations of further easing from the Federal Reserve.
On the greenback, Aussie a touch firmer at $1.0365 vs Tuesday's late local $1.0360, having bounced off one-month lows against both the US dollar and yen.
Still, sentiment is negative with 5, 10 and 20-day MA trending lower. Support seen at $1.0345, ahead of 55-day MA of $1.0328 with resistance at $1.0391, Tuesday's high.
Concerns about the health of China's economy have been weighing on Antipodeans. China is Australia's biggest export market.
Not helping is a 0.2 pct fall in Australian construction work done in Q2. The median forecast had been for a flat outcome.
New Zealand dollar struggles, slumping to a one-month low of 72.11 versus a currency basket, while a cut in dairy giant Fonterra's milk payout price on Tuesday also hurts the currency.
Kiwi also mired near a one-month low versus the yen , and underperforms versus the Aussie, which claws back from a seven-week low hit on Tuesday.
Kiwi suffers across the board on Fonterra news, although a softer currency would actually improve returns to farmers. Global prices have shown some signs of strengthening in recent Fonterra auctions. The next sale is due on Sept 5.
Technical support seen at $0.8030, after a test to push below that level failed earlier this month. A breach would open the way to $0.8000.
Federal Reserve chairman Ben Bernanke will speak at Friday's gathering, which he has previously used to signal the Fed's policy intentions.
ECB head Mario Draghi will now not go to the event because of work commitments, which is being seen as a sign that he will probably unveil plans to tackle the crisis at the Sept. 6 ECB meeting.
New Zealand government bonds little changed, although slight demand for 2019 bonds nudges yield around half a basis point lower.
Australian government bonds near three-week highs with the three-year contract up 0.01 points to 97.410 and the 10-year contract 0.005 points higher at 96.890.
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