The Australia dollar slipped across the board after a closely watched employment report showed a dip of 6,300 in November, missing forecasts of a 10,000 rise, while the jobless rate rose a tick to 5.3 percent.
The local currency fell to a session low of $1.0233 , from $1.0286 in New York, before paring losses to$1.0260.
Still, with stocks across Asia in the red, the Aussie is holding up rather well.
"Even though we had a rate cut and a fairly lousy employment data, the downside seems fairly limited," said a trader at a European bank in Singapore.
"It is well-known in the market that there are bids around $1.0220 from a combination of players... proprietary desks, central banks and real money funds," he said.
Investors are also cautious about pushing the Aussie too far ahead of an expected European Central Bank (ECB) rate cut and a crucial EU leaders summit. An ECB easing from the present 1.25 percent would likely be seen as risk-positive and supportive of the Antipodean currencies.
For now, figures to watch for the Aussie, which has gained 6 percent since hitting a trough of $0.9664 on Nov 23., are around $1.0220 for support and $1.0305/10.335 on the topside.
Earlier this week, the Reserve Bank of Australia (RBA) lopped 25 basis points off its cash rate, taking it to 4.25 percent, the second cut in as many months.
With Europe's debt crisis casting a long shadow across the globe, investors are wagering that rates have further to fall.
Interbank futures remain fully priced for another quarter-point cut in February. The RBA does not have a scheduled policy meeting in January, but it could hold an emergency meeting at any time should Europe really implode.
Australian & New Zealand Banking Group became the first of the nation's top banks to announce it was cutting mortgage rates by the full 25 bps. There had been speculation that if the banks eased by less than 25 bps, that would put additional pressure on the RBA to cut the official rate by more.
Futures imply rates could be around 3.25 percent by June next year, while overnight indexed swaps show something closer to 3.75 percent.
Aussie debt futures jumped, trimming recent losses, with the three-year contract up 0.07 points at 96.870, and the 10-year contract 0.06 points higher at 96.065.
NEW ZEALAND DOLLAR
The New Zealand dollar was rooted to the spot around $0.7800, against $0.7786 in late New York trading, as the country's central bank held rates at a record low.
RBNZ governor Bollard dropped an explicit reference to higher rates contained in previous statements and said the bank's forecasts pointed to a "gentle rise" is rates from the middle of 2012. See
"The markets were distracted, the NZ dollar wobbled just as much as the euro and Aussie this morning, hence no discernible reaction to Dr Bollard dropping the tightening bias," said TD Securities head of Research Annette Beacher.
A Reuters poll after the statement showed a clear consensus that rates will not start to rise until the third quarter of next year.
The kiwi also drew support from investors selling the Aussie after the soft jobs data, which sent the cross rate down around 0.4 percent to NZ$1.3140.
Support for the kiwi is seen at $0.7760, then $0.7723 with $0.7840 capping the topside. The currency has traded a thin $0.7740 to $0.7836 range for the week.
New Zealand interest rate futures and government bonds were barely moved by the RBNZ statement. Financial market pricing, based on interest rate swaps, implied a 16 percent chance of a cut in January and no change in rates for the next 12 months.