SYDNEY/WELLINGTON: The Australian and New Zealand dollars recouped a little of the week's hefty losses on Wednesday as Japanese shares bounced, though uncertainty over the nuclear crisis in Japan could see another wave of risk aversion.
The Australian dollar edged up to $0.9930, after plunging to a two-month trough of $0.9815 on Tuesday, but remained 2.1 percent down so far this week. Support was seen around $0.9803, with resistance at $0.9966 and $0.9991.
The kiwi consolidated around $0.7320/25 during a session dominated by risk, after it had been dumped to a near six-month low of $0.7267 overnight.
Support is seen at $0.7270, the 50 percent retracement level of last year's May/July rally, while resistance is at $0.7340 and then $0.7365, Monday's daily high.
The Antipodean currencies received a lift from a moderate rally in Japan's battered stock market , which rose 5 percent. The Nikkei had suffered its worst two-day rout since 1987, plunging an eye-watering 16 percent.
However, the Aussie and kiwi remain vulnerable as conditions at a stricken nuclear power plant in Japan remain highly uncertain.
Investors often treat the Aussie as a proxy for risk, both in Asia and globally, selling it at times of stress even if Australia's fundamentals remain sound.
For now, markets seemed calm despite news that staff at a quake-damaged Fukushima nuclear site has been evacuated following an increase in radiation
Short-dated Australian debt also gave back some of Tuesday's huge gains. Interbank futures and bank bills dipped, but still imply around a one-in-three chance the Reserve Bank of Australia would cut its 4.75 percent cash rate in the next few months.
Swaps are pricing in a one-in-five chance of a 25 basis point easing in April, though most analysts seriously doubt it. Nomura, for one, maintained its forecast of a cash rate hike in May.
"Our GDP growth outlook for Australia in 2011 is unchanged at 3.3 percent with some upside risk to our 3.8 percent forecast for 2012," said Stephen Roberts, economist at Nomura.
Japan, Australia's second largest export market, will likely need more of the nation's coal and liquefied natural gas as substitutes for nuclear fuel. This is turn should boost Australia's exports, auguring well for the local economy.
The Aussie perked up to 80.13 yen, after tumbling to a near five-month low of 79.23 yen overnight, with dealers wary in case Japan intervenes to curb the yen.
It also pared some of its losses on the Swiss franc at 0.9093 francs , having fallen 2.7 pct overnight to as deep as 0.9020 francs. The euro hit an early 18-week peak at A$1.4151 , before edging back a touch to A$1.4070.
The kiwi was anchored around 59.20 yen, after touching a near seven-month low of 58.64 as Japanese investors were seen liquidating carry trades.
The NZ dollar was unmoved by a sharp fall of 8.2 percent in dairy prices in Fonterra Group's latest auction, the first drop since November. See
Similarly, a survey by the ANZ Bank showing consumer confidence falling to a two-year low in the wake of last month's Christchurch earthquake, but still remaining positive, had no obvious impact. See Another measure of NZ consumer confidence is due out on Thursday.
NZ government bonds closed a touch firmer with mid-dated bonds yields, which move inversely to prices, as much as 2 basis points lower. Short-dated interest rate futures were a touch weaker.
Australian bond futures were a shade lower after a huge rally on Tuesday. The three-year contract was down 0.05 points at 95.040 and the 10-year contract 0.005 points lower at 94.580.
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