WELLINGTON/SYDNEY: The Australian and New Zealand dollars slipped on Wednesday as rising euro-zone borrowing costs fueled concerns the debt crisis may engulf top-rated members such as France, though resilience in stocks contained losses.
The Australian dollar struggles to make any progress against major currencies, even the wobbly euro.
It dips to $1.0143, from $1.0188 in New York, further retreating from Monday's high of $1.0351. It has lost nearly 4 pct this month due to the deepening European debt crisis.
Aussie has stayed below the key 20-day MA of $1.0358 for nearly a week and a break of $1.0050 targets $0.9910, the 61.8 pct retracement of the $0.9388-$1.0753 move. Resistance found at $1.0209.
New Zealand dollar subdued at $0.7700, against its New York close of $0.7713, having touched a one-month low of $0.7671 overnight. Near term support at the daily low of $0.7670 with the first line of resistance at $0.7730 and then $0.7760.
A softer euro, down 0.2 pct, is a drag on risk currencies but firmer Asian stocks help offset losses. Korean shares up 1.2 pct.
A modest increase in Australia's wage price index confirmed wages were less of a threat to inflation and so no obstacle to a further cut in rates if needed.
On Tuesday, minutes of Australia's central bank monthly policy meeting revealed it considered leaving rates unchanged in November but decided that lower inflation at home and the debt crisis in Europe warranted a "modest easing" in policy.
The Reserve Bank, which cut rates by 25 bps to 4.5 pct earlier this month, gave no hints on whether it may cut again. Interbank futures still imply around a 94 percent chance of a cut to 4.25 pct in December and a total easing of 58 bps by February.
The Australian dollar at NZ$1.3168, off Tuesday's five-and-a-half month peak of NZ$1.3221. Uptrend intact with $1.3230 first hurdle higher to a target of NZ$1.3310.
NZ regional trends survey points to economic growth of 0.6 percent in third quarter. Analysts have seen upside risks to Q3 growth after much stronger-than-expected retail sales data this week.
NZ dairy giant Fonterra reported a 2.6 percent rise in average prices at its latest two-weekly auction, the second rise in three auctions.
New Zealand government bond prices extend gains with yields up to 5 basis points lower.
Australian debt futures higher, with the three-year debt contract up 0.02 points at 96.620. The 10-year gains 0.02 points to 95.915, having peaked to a five-week high earlier in the session.
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