Aussie, NZ$ pare steep losses on China hope

WELLINGTON/SYDNEY: The Australian and New Zealand dollars pared some of its recent heavy losses Tuesday as Wall Street staged a late recovery on a report that Italy had asked China to buy its debt, helping calm what had been a scary decline across global markets.

* Trading volatile, with the Aussie back up at $1.0353, having slid as far as a one-month low of $1.0256 on Monday. Even after the bounce, it has still lost around 2.9 percent in the past three sessions.

* Aussie likely to see some corrective gains, but faces obstacle around 200-day moving average at $1.0380 while support lined up at $1.0245, a 61.8 pct retracement level.

* The NZ dollar around $0.8233, after slipping to a near five-week low of $0.8118 in offshore trade from $0.8158 in late local session.

* Kiwi resistance seen around $0.8241, a 100-day moving average, with support at $0.8120, then $0.8065.

* The euro recovers its losses on a report by the Financial Times, which said Italy had asked China to make "significant" purchases of Italian debt . It hit a seven-month low against the US dollar earlier.

* Benchmark 10-year US Treasury yields rose to 1.96 pct, from 1.92 pct, as Wall Street staged a late rebound.

* The euro rises to A$1.3212 , having fallen to a six-week low of A$$1.3013 . The euro also up against the kiwi at NZ$1.6612 , from NZ$1.6538 overnight.

* Local focus turning to NZ central bank, which is expected to hold rates steady on Thursday as global uncertainty overshadows the need to start raising rates to contain inflation pressures. However, RBNZ still expected to affirm the need to start withdrawing stimulus at some stage.

* Other data on Tuesday include the NAB business confidence survey in Australia and manufacturing and food price index in NZ.

* Market pricing implies 8 pct chance of a 25 bps rise from the RBNZ this week, with around 42 bps of tightening over the next 12 months.

* Australian bond futures fall, with the three-year contract down 0.075 points to 96.385 and the 10-year 0.035 points lower at 95.850. NZ government bonds still flat early.

Copyright Reuters, 2011