WELLINGTON/SYDNEY: The Australian and New Zealand dollars found a tentative footing on Wednesday after two sessions of steep declines as markets wait to see if the US Federal Reserve will provide more stimulus.
The Aussie was at $1.0364 , drifting up from Tuesday's low of $1.0272, as traders squared up positions in the currency which has fallen more than 3 percent in just two days.
The Fed's post-meeting statement is due at 1630 GMT and Fed Chairman Ben Bernanke will hold a media conference at 1815 GMT. He could prepare markets for more quantitative easing even if nothing is done at the conclusion of this meeting.
Support for the Aussie is seen at $1.0232, the 38.2 percent retracement of the October rally from $0.9388 to $$1.0753.
Data showing a sharp 13.6 percent drop in Australia's building approvals, well below forecast of a decline of 4.5 pct, did little to help the Aussie.
The figures underscored a soft housing market and further justified the Reserve Bank of Australia's interest rate cut on Tuesday -- the first easing in over two years.
"It is no surprise that activity in the housing and construction sector remains weak, and certainly contributed to the RBA's decision to cut interest rates yesterday," said Spiros Papadopoulos, economist at NAB.
"Lower interest rates will help demand somewhat in coming months, but it will be a sluggish recovery until house prices stop falling and investor demand recovers."
Interbank futures imply a further 100 basis points worth of easings by mid-2012, a scenario not shared by analysts who say the aggressive market pricing is due in part to a global flight to safety.
Indeed, sentiment is still shaky following Greece's shock call for a referendum which threatens to unravel a deal struck last Thursday to contain the euro zone debt crisis.
The Greek Prime Minister will later face the leaders of France and Germany, who summoned him for crisis talks in Cannes, before a G20 summit of major world economies, to push for quick implementation of the bailout deal.
ALSO STEADIER
The New Zealand dollar was steady on the session at $0.7931, after dipping as low as $0.7914. Support for the kiwi was seen at $0.7910, with resistance at $0.7980 and $0.8020.
The kiwi was not helped by a further decline in dairy prices. Dairy products are New Zealand's top exports, generating more than 7 percent of its GDP.
"Commodity prices are one important channel that the issues in Europe and concerns about global growth will feed through in New Zealand," said Bank of New Zealand strategist Mike Burrowes. "To date, the impact on dairy prices has been relatively mild."
The Antipodeans lost ground on the yen, with the Aussie slipping to 80.84 yen and the kiwi to 61.93 yen as the impact of Japan's one-day intervention to weaken the yen on Monday faded. The Aussie hit a high of 83.90 yen, while the kiwi reached 64.54 on Monday.
New Zealand government bond prices rose on safe haven demand, with yields as much as 8 basis points lower.
Australian debt futures were also firmer with the three-year contract up 0.11 points at 96.330 and the 10-year up 0.135 points at 95.700.
On Thursday, New Zealand's employment data and Australia's retail sales data will come into focus.
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