SYDNEY/WELLINGTON: The Australian dollar remained on the defensive on Tuesday after hitting a six-week low against the US dollar overnight, with the market wary ahead of manufacturing data from China.
Investors await China flash PMI for April and the Aussie will be vulnerable to any disappointment. Recent mixed data from China has failed to match market expectations and stirred concerns about global growth.
"The market is still a bit shaken up following the surprising weakness in last week's China data," BNZ analysts said in a note. "As a result, a downside surprise today would probably have the bigger impact on the NZD/USD and AUD/USD."
Aussie falls as far as $1.0236 offshore, its weakest since early March, before steadying at $1.0267. Having failed to break major resistance in the $1.0580/0600 zone earlier in the month. Investors are now testing the downside of a range that has held pretty much since August last year.
Huge support lies in the $1.0150/1.0200 area and should be tough to break. A move under there could see the Aussie fall under parity.
Kiwi trades at $0.8425, after easing as far as $0.8383 offshore trade and well off a 20-month high of $0.8676 hit just over a week ago.
The higher-yielding Antipodean currencies hang just below five-year highs versus the yen and are still expected to extend gains on the view that aggressive monetary easing in Japan will further weaken the yen.
But further upside has stalled as the US dollar struggles to clear option-related offers at the 100 yen level, stalling around 99.90 yen.
Aussie at 102.00 yen after meeting resistance around 102.90. Kiwi at 83.66 yen after failing at 84.50.
Investors also await PMI from the United States and Germany on Tuesday. Weak readings could be negative for the Antipodean currencies if they ratchet up general risk aversion.
Technical signs are bearish for the Aussie after it fell below $1.0294, the 61.8 percent retracement of its March-April rally. This raises the risk of a slide to $1.0110 hit last month. Resistance seen at $1.0350, roughly a high hit on Friday.
Kiwi hovers just above technical support at $0.8419, the 50 percent retracement of its rally earlier this month. If it holds above that, market participants see a push up towards $0.8500 in the near term.
Support seen at $0.8400, a level which has held for the past week or so. Offers suspected above $0.8675 seen limited any near-term gains.
Markets await the Reserve Bank of New Zealand's rate review on Wednesday. While no policy change is expected, investors will watch for any suggestion that an interest rate rise in possible this year, which would push the kiwi higher.
They will focus on how the RBNZ statement balances concerns about rising real estate prices against low inflation and a strong New Zealand dollar.
Current market pricing implies a tightening of only 10 basis points over the next 12 months.
New Zealand government bonds edge up in early trade, prodding yields a basis point lower across the curve. * Australian government bonds also rise, with the three-year contract indicated 0.030 points higher at 97.340, while the 10-year contract rises 0.040 points to 96.830.
<Center><b><i>Copyright Reuters, 2013</b></i><br></center>
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