Aussie & NZ dollar fight to retain gains
Aussie edges back to $0.9890, from an early $0.9924 high. It had got as far as $0.9976 on Monday as markets underwent one of their periodic bouts of optimism over Europe. Traders say the break above Friday's $0.9773 peak ends a 9-day sequence of lower daily highs and lower lows, suggesting the slide may be waning. Support at $0.9830 with initial resistance at $0.9950. Topside target for Aussie as it recovers from its month long slide is around $1.0335. The kiwi dollar inched back to $0.7527, from an overnight high of $0.7574, but remains well above Friday's low around $0.7367. Resistance at $0.7575 while support at $0.7480. Australia's government, as expected, cut its forecasts for economic growth and tax revenues, blaming the crisis in Europe for dampening consumer and business confidence. The Labor government said it had found enough spending cuts and savings to still reach a budget surplus in 2012/13 as promised. The tighter fiscal outlook provides another reason for the Reserve Bank of Australia (RBA) to consider cutting interest rates at its regular policy meeting next week. The market is almost full priced for a cut of 25 basis points to 4.25 percent, following on this month's easing. Sentiment over Europe tarnished by a newspaper report that S&P could change the outlook for France to negative in the next few days. Moody's said it could downgrade the subordinated debt of 85 euro zone banks. Fitch also changed the outlook for the United States to negative, though any move on the triple A rating would not come until late 2013. The Antipodeans higher against the safe-haven yen. The Aussie firm at 77.34 yen, off a seven-week low of 74.72 hit last week. The kiwi up at 58.82 yen. The Australian and New Zealand economic outlooks are seen as positive albeit with growing headwinds according to the Organisation Economic Co-operation and Development's (OECD) semi-annual report. See In New Zealand, markets trim the chance of a rate cut next month to 11 pct from 16 pct, and the implied easing over the next year to 4 bps, from 16 bps. Analysts at ANZ-National Bank and ASB Bank push out their calls for the next central bank's rate hike to December next yr from June next yr on Europe's debt crisis. New Zealand government bonds ran into profit taking after recent gains, with yields up 1 to 2.5 basis points along the curve. Aussie debt futures also ease with the three-year contract down 0.020 points at 96.900, and the 10-year contract dipping 0.035 points to 96.045.