WELLINGTON/SYDNEY: The Australian and New Zealand dollars languished near six-week lows on Tuesday, with markets focused on a rate decision from the Reserve Bank of Australia, which is widely expected to keep interest rates steady.
The outcome of the RBA's policy meeting is due at 0430 GMT and economists expect rates to remain at 3.5 pct for a third straight month. Bank officials have sounded content to wait for cuts made in May and June to make themselves fully felt.
But interbank futures have narrowed the odds of a cut further out, giving a 3-in-4 chance of a move in October. The market is fully priced for a cut to 3.25 pct in November.
Aussie hits six-week lows of $1.0224, vs $1.0268 in late local trade on Monday, as Aussie bears continue to look for excuses to sell. Last at $1.0242.
Markets may find more excuses to sell depending on the tone of the RBA statement and any comments on China's slowdown, the recent steep fall in iron ore prices and the high Aussie dollar.
The currency suffered a brief knock after Australian miner Fortescue said it would scale back operations due to falls in iron ore prices.
Local dollar has shed 3.8 pct in the past month on sliding commodity prices, slowing Chinese economy and weak domestic data. It hit a four-month peak of $1.0615 early August.
Charts point to more weakness, with support seen at $1.0220, the 38.2 pct retracement of the June-August move, ahead of $1.0200, the 100-day MA. Resistance found near $1.0300.
Australia's current account shows a deficit of A$11.8 bln vs forecasts of A$12.2 bln, while net exports could add 0.3 percentage points to the Q2 GDP report due on Wednesday.
Other data out on Tuesday showed spending by the Australian government made a solid contribution to Q2 economic growth, rising a firm 1.9 pct in Q2 to A$83.05 bln.
The NZ dollar sits close to six-week lows at $0.7971, from $0.7985 in early trade. Kiwi also seen on the backfoot with support initially around $0.7957, then $0.7920. Monday's high around $0.8016 seen capping the topside.
A resilient euro edges up to near two-month highs against the Antipodeans, pushing to A$1.2314 and NZ$1.5828 . Antipodeans similarly soft against the yen, wallowing at 6-week troughs .
New Zealand's monthly commodity snapshot shows a small lift in prices, but a rise in the value of the NZ dollar wipes out the price lift. Latest Fonterra dairy auction results are due on Wednesday.
NZ government bonds with mild offered tone at longer end of the curve, sending yields up to 1.5 basis points higher.
Bearish sentiment benefits Australian debt futures with the three-year bond contract up 0.04 points at 97.640, having peaked to 96.660, its highest since late July. Charts suggest the next big level is 97.706, the 61.8 percent of the June-August retracement.
The 10-year contract edges 0.02 points higher to 97.040, not far off one-month highs of 97.085 touched on Monday.
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