Aussie and NZ dollars softer ahead of Obama, China

WELLINGTON/SYDNEY: The Australian and New Zealand dollars are sitting lower on Friday as investors turn risk wary after the European Central Bank signaled a pause in rate tightening and the Federal Reserve head gave no details on how he might support for the struggling US economy.

* Aussie soft at $1.0590, after climbing to $1.0661 overnight. Weak jobs numbers wiped out much of the rally from earlier in the week.

* The Aussie struggles around support levels points to possible further downside. Initial support seen at $1.0566 and below that 21 day moving average at $1.0530. Resistance at $1.0637.

* The New Zealand dollar fares better at around $0.8334, having ranged $0.8316 and $0.8383 overnight, from its late local level around $0.8340 on Thursday.

* Support for the kiwi around $0.8285 then $0.8256 with $0.8355 capping the topside.

* ECB holds rates and the President Jean-Claude Trichet talks of the downside risks to the euro zone economies, which prompts the euro to fall to a two-month low against the dollar.

* The losses deepen after Federal Reserve Chairman Ben Bernanke offered no details of potential easing measures to boost a flagging US economy, which encourages some dollar bulls.

* Focus shifts to US President Barack Obama's televised speech to Congress at 2300GMT, in which he is expected to announce a jobs package.

* China has raft of data on Friday, including CPI, retail sales and industrial output . An easing in inflation could be Aussie positive by lessening the pressure for more tightening and fuel recent speculation about looser policy.

* The Antipodeans notch solid gains against the euro, but retreat against the yen. Aussie sits lower against the kiwi around NZ$1.2710, off a two-month high struck Wednesday.

* Australia's weak job data casts doubt on whether the central bank can maintain its steady rates policy. The sometimes volatile data showed a loss of 9,700 jobs against expectations of a gain of 11,000. Job less rate hits a 10-month high of 5.3 percent.

* NZ central bank expected to hold rates steady next week as global uncertainty and fragility overshadows the need to start raising rates to choke off inflation pressures. However, RBNZ still expected to affirm the need to start withdrawing stimulus at some stage.

* Market pricing implies 11 percent chance of a 25 bps rise next week, with around 38 bps of tightening over the next 12 months.

* Australian bond futures higher, with the three-year contract up 0.03 points to 96.330, while the 10-year climb 0.04 points to 95.780.

* New Zealand government bonds flat.

Copyright Reuters, 2011