Aussie, NZ dollars knocked by deepening euro fears

WELLINGTON/SYDNEY: The Australian and New Zealand dollars were hovering just above multi-week lows on Thursday and looke
17 Nov, 2011

* Australian dollar around $1.0081, having ranged From $1.0060 to $1.0185 overnight.

* The Aussie is down around 3.8 percent so far this month and has been driven by the euro zone's fiscal crisis. Expected to find support at recent low of $1.0051, while resistance initially at $1.0190 and then $1.0209.

* Euro falls to a five-week low against the dollar and yen as rising French and Italian borrowing costs heighten concerns about the debt crisis is engulfing more economies. Italian bank UniCredit says it will ask ECB to extend its access to funding, raising fears on health of banks.

* European Central Bank buying Italian and Spanish bonds gave only temporary relief. Once intervention stopped, yields resumed climbing as investors doubted how much the ECB can buy. Eyes on a Spanish bond auction later on Thursday.

* US stocks turn negative late in session to close around 1.6 percent lower. See Sentiment apparently hurt by Fitch warning that EU problems could ultimately hurt US banks , and Moody downgrades of German Landesbankens.

* Reserve Bank of Australia governor Glenn Stevens gives some opening remarks at financial forum around 2150 GMT. New Zealand has third quarter producer price index, which is peripheral to central bank rate thinking.

* Australian debt futures a touch softer, with the three-year debt contract down 0.01 points to 96.680 and the 10-year contract down 0.035 points to 95.935.

* NZ dollar still wobbly around $0.7639, after bouncing between a six-week low of $0.7624 and $0.7722. Kiwi is down nearly 5 percent so far this month.

* Support seen at previous low of $0.7626 and below that the support pivot of $0.7554. Resistance at the hourly high around $0.7730 and then $0.7750.

* No sign of any immediate relief for the Antipodeans as euro zone grapples with debt crisis.

* Like the Aussie, kiwi bond yields also down to fresh lows, with two-year yields at 2.445 pct and 10-year at 3.86

* Antipodeans on back foot against the yen, with Aussie down 0.9 percent at 77.66 yen and kiwi 0.8 percent lower at 58.88 yen

* The Australian dollar gains against kiwi at NZ$1.3182, having struck a five-and-a-half month peak of NZ$1.3221 on Tuesday.

* Financial market pricing on NZ rate outlook now completely at odds with analysts, who are picking rate rises to start in the first half of next year. But pricing implies a 27 percent chance of a rate cut next month, and 6 bps cut over the next 12 months.

* NZ debt prices mostly flat. They have risen sharply in past week, sending yields towards historic lows, as investors look to reinvest some of the NZ$9 billion released on the maturity of the NZ 2011 bond.

* NZ government bond auction offering NZ$500 million in three maturities. NZ bond yields have tumbled in recent days.

Copyright Reuters, 2011

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