WELLINGTON/SYDNEY: The Australian and New Zealand dollars were under pressure on Tuesday as political woes in Europe shook share markets, while investors awaited a reading on Australia inflation that could give the green light for a rate cut.
* The Australian dollar at $1.0315, having traded between a 10-day low of $1.0272 to $1.0346 overnight. Near term support is at $1.0270 and then a solid level at $1.0226. Resistance at $1.0348.
* The New Zealand dollar also softer at around $0.8126, from $0.8161 late on Monday. It ranged from a one month low of $0.8088 to $0.8165 overnight. Support at $0.8058 - the double low in March - with resistance at 0.8190.
* Eyes on Australian first-quarter inflation due at 0130 GMT, which is expected to mirror Monday's subdued PPI outcome, clearing the way for the first easing of monetary policy since December.
* Analysts forecast key measures of underlying inflation rose a moderate 0.6 percent in the first quarter, nudging the annual rate down to around 2.4 percent and comfortably within the RBA's long-term target band of 2 to 3 percent
* Market assumes it would take a quarterly rise of 0.8 pct or more to put a rate cut in doubt, while a very low reading would add to expectations of more than one easing ahead.
* The Reserve Bank of Australia (RBA) has already indicated it will consider cutting the 4.25 percent cash rate at the May 1 policy meeting, providing the inflation numbers are tame.
* Financial markets imply a 92 percent probability of a cut to 4 percent in May, and more than 100 basis points of easing over the next 12 months.
* A soft reading could force the Aussie through support levels that have previously held and open the way to a retracement to around $1.0200, its weakest this year.
* The outlook for lower inflation helped lift longer-term Australian debt futures to record highs. The 10-year contract hit a peak of 96.330 overnight before settling 0.035 points higher at 96.330.
* The three-year contract up 0.04 points at 96.900, the highest in three months.
* The Antipodean currencies retreat further against the yen, which was boosted by a safety demand. Aussie close to 1 percent lower at 83.68 yen. Kiwi likewise lower at 65.95 yen , within striking distance of a trough of a six week trough hit last week.
* NZ has migration and credit card billing numbers, but key event is Thursday's Reserve Bank of New Zealand rate review. Markets give virtually no chance of a rate move by the RBNZ, and the focus is on how dovish the statement will be.
* Australia and New Zealand markets closed on Wednesday for ANZAC day holiday.
* The euro falls on weak regional data and fears the debt crisis could spread to some of the region's healthier economies .
* The Dutch government collapses and resigns after coalition partners fail to agree on budget cuts, raising the prospect it might face a sharp rise in borrowing costs, and a threat to its triple-A debt rating.
* Private data shows Germany's manufacturing sector contracting at the fastest pace in nearly three years in April also weighs euro. A contraction in manufacturing and services also deepened in the euro zone as a whole.
* The increased risk aversion sees investors shy away from stocks, with Wall Street falling close to 1 percent, while British and European stocks fall around 2 percent.
* New Zealand government bond prices a touch firmer, as US Treasuries push higher on political uncertainties in Europe.