WELLINGTON/SYDNEY: The Australian and New Zealand dollars wallowed at one-week lows against the greenback on Friday as investors retreated to the sidelines ahead of the outcome of a crucial EU summit.
Both Antipodeans were hit hard overnight when investors dumped risk assets after the ECB president doused hopes the bank would massively step up buying of government bonds, a move seen key to containing the euro zone debt crisis.
Aussie at $1.0190, having fallen as low as $1.0145 overnight, a level that should provide immediate support. This is followed by $1.0077, the base of the daily Ichimoku cloud.
Aussie barely reacts to Chinese inflation data as investors brace for the outcome of the critical EU summit. China is Australia's largest export market, and any surprises in data there tend to move the Aussie.
China annual CPI slips to 4.2 pct in Nov, well off a three-year high of 6.5 pct in July, creating more room for the central bank to ease policy to underpin economic growth.
Aussie debt futures pare gains, with the three-year contract up 0.01 points at 96.850, and the 10-year contract 0.06 points higher at 96.100.
NZ dollar at $0.7740, having skidded to $0.7712 overnight. Kiwi seen trapped in a bearish pattern, and vulnerable to retesting the low. Resistance pegged at $0.7879.
Kiwi unmoved by partial retail sales data, which fell for the first time in three months in November as spending linked to the Rugby World Cup dried up.
Markets largely shrugged off RBNZ's rate comment on Thursday, when it dropped an explicit reference to higher rates contained in previous statements but said its forecasts pointed to a "gentle rise" in rates from mid 2012.
NZ government bonds rise, with local yields extending falls to 3 bps along the curve.
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