WELLINGTON/SYDNEY: The Australian and New Zealand dollars remained in sight of six-month highs on Tuesday as markets waited to see if Australia's central bank would cut interest rates again, in what could be a very close call.
The Aussie marks time at $1.0720, from $1.0731 in New York. It hit $1.0794 on Friday, its highest since August, when an upbeat US jobs report fuelled a risk rally.
Key event is Reserve Bank of Australia's (RBA) rate decision at 0330 GMT. Most analysts expected a cut of 25 basis points to 4 pct, the third easing in as many meetings.
Case for a cut was backed by Monday's surprisingly soft retail sales report and a private survey showing well-contained price pressures.
However, it could be a close call given recent upbeat US data and the improvement in global risk sentiment. Some investors think the bank could delay a move until March.
Interbank futures put the odds of an easing at around 50-50. Swaps imply a 76 pct chance of a move. The June futures contract now implies a rate of 3.6 percent, compared to 3.2 percent just a month ago.
Should the RBA keep rates on hold, Aussie would be poised to climb towards $1.800. If, on top of that, Greece seals its much awaited debt deal, traders say the local dollar could retest $1.1081, its all-time high set in July.
Should the RBA cut rates, Aussie to find initial support at $1.0650/80.
Close attention on Aussie banks which are not expected to pass on any rate cut in full. Traders warn this would put additional pressure on the Aussie as markets price in an increased likelihood of further easing to offset commercial banks' actions.
The kiwi pauses at $0.8345, fractionally above its New York close. Support for the kiwi is around $0.8300, $0.8285 with initial resistance at $0.8357, the high for the month, with $0.8383, this year's peak, the next strong barrier.
The euro edges further from record lows against the Antipodeans. Last at A$1.2228, having touched an all-time low of A$1.2160 on Friday. Against the kiwi, at NZ$1.5715,, off a record trough of NZ$1.5627 struck on Monday.
Euro broadly resilient as the Greek debt restructuring drags on. Market seems to assume Greece will avoid a disorderly default while a meeting of political leaders in Athens was postponed to Tuesday.
New Zealand wages growth in fourth quarter a touch above expectations at 0.7 percent on previous quarter and 2 percent on a year ago, while jobs survey shows some modest lift in employment. But data has nothing to worry central bank. See
Australian bond futures a touch lower, with the three-year contract down 0.01 points to 96.660. The 10-year contract was 0.005 points lower at 96.100.
New Zealand government bonds slipped, with yields as much as 4.5 basis points higher.
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