Aussie dlr off lows ahead of RBA rate call, NZD outperforms

WELLINGTON/SYDNEY: The Australian dollar was off multi-month lows but still under pressure on Tuesday ahead of a central bank policy meeting that was expected to hold rates steady, with the New Zealand dollar bouncing back strongly.

The Aussie climbs back to $1.0190, after it touched an eight month low of $1.0116 on Monday. It has been in a downtrend against its US counterpart since topping out at $1.0600 in early January.

Near term support for Aussie seen at the overnight low around $1.0116, with $1.0210 the first hurdle higher.

The Reserve Bank of Australia (RBA) announces the outcome of its March meeting at 0330 GMT. Nearly all economists in a Reuters poll forecast no change to the record-low 3 percent cash rate, while financial markets imply only 17 percent chance of a cut.

Statement will be closely scrutinised for hints on further moves. Analysts assume the bank will keep an easing bias, and any change to that would be a surprise.

Markets are still pricing in 50 basis points of easing over the next 12 months.

Aussie faces a few data tests before the RBA rate decision . Retail sales have tended to surprise on the downside, while net export and government spending figures will help refine forecasts for Q4 GDP due on Wednesday.

The New Zealand dollar bounces to $0.8267, from $0.8206 late on Monday locally. It plumbed a year-low of $0.8193 overnight. Kiwi near term support is seen at $0.8220 with resistance seen at $0.8280.

Kiwi draws solid support in buying against the Aussie, which falls 0.6 pct to a one-week low of NZ$1.2318.

The euro hovers near a 2-1/2-month low against the dollar, pressured by political uncertainty in Italy and expectations the European Central Bank will cut interest rates sooner than previously anticipated.

Antipodeans have varying fortunes on cross rates. Aussie dips 0.2 pct on the yen, while kiwi notches 0.3 pct gain. Similarly on sterling and euro, which both inch higher on Aussie but give ground to kiwi.

Aussie also wearing fallout from Chinese moves to increase property down payments and loan rates in parts of the nation where home prices are rising too quickly, which might reduce demand for Australian exports.

Australian government bond futures fall, with the three-year contract down 0.05 points to 97.260, and the 10-year contract falling 0.04 points to 96.710.

New Zealand government bonds with mild offered tone, with yields a fraction higher across the curve.