Wires

Aussie & NZ dollars pare losses, still on defensive

WELLINGTON/SYDNEY, Oct 9 (Reuters) - The Australian and NewZealand dollars pared some of their recent losses on Tuesday asinvestors took profits on short positions built against the euroand sterling, though the mood was still defensive overall.

* Aussie around $1.0191, after short coveringlifted it to an overnight high of $1.0220 from $1.0165 in latetrade on Monday.

* Aussie still looking vulnerable, with major support foundat $1.0150, an Oct 8 low, while resistance at 100-DMA $1.0246.

* It has fallen around 2 pct so far this month vs its U.S.counterpart and 3 pct against the euro, weighed by a rate cut bythe Reserve Bank of Australia (RBA) last week and the prospectof more easing on a cloudy Chinese outlook.

* Interbank futures pricing shows a 64 pct chanceof another quarter of a point cut next month with OIS markets

showing nearly 100 bps worth of easing over the next 12months.

* In focus will be a speech by RBA Deputy Governor PhilipLowe at 0140 GMT on "The Labour Market, Structural Change andRecent Economic Developments".

* It could address the unusually sharp drop in theparticipation rate seen in the last year which has helped keepunemployment low at 5.1 pct even though jobs growth has beenvery sluggish.

* NZ dollar at $0.8194 early from $0.8174 onMonday, having hit a one-month low of $0.8150 overnight.

* Kiwi, which is down 1.2 pct this month, helped by crossbuying, with sellers seen lined around 10-DMA at $0.8237 andsupport at Sept 10's high of $0.8134, then $0.8100.

* Risk sentiment weighed after European equities fell 1.4pct. U.S. stocks also slip, albeit in quiet trading, ahead ofAlcoa results.

* Euro off two-week highs against the dollar and yen aftereuro zone ministers said Spain did not yet need a bailout. TheThomson Reuters-Jefferies CRB index was down 0.5 pct,while U.S. bond market shut for Columbus Day.

* The World Bank cut its economic growth forecasts for theEast Asia and Pacific region on Monday and said there was a riskthe slowdown in China could worsen and last longer than manyanalysts have forecast.

* Yet the return of Chinese markets from a holiday saw spotiron ore prices rise 6 pct to $110.40 , a positivefor Australia as the steel-making mineral is its biggest exportearner.

* Aussie/kiwi keeps to recent range, last around$1.2440, not far from a one year low of NZ$1.2361 hit last week.

* Euro pulls back to A$1.2712 and NZ$1.5830

respectively.

* The Antipodeans lower against the yen, with the Aussielast at 79.96 yen AUDJPY=R>, having slipped to an overnight lowof 79.34 yen, lowest since June 28. Kiwi hit a three-week low of63.49 yen , but bounces back to 64.20 yen early.

* NZ expects a quarterly survey of business confidence

and partial retail sales indicator inthe morning.

* NZ government bonds start firmer, with yieldsaround 4 basis point lower along the curve.

* Australian government bond futures higher with three-yearcontract up 0.020 points at 97.660, and the 10-yearcontract 0.030 points at 97.055.

((Australia/New Zealand bureaux)(+61 2 9373 1800/+64 4 8027980))

Keywords: MARKETS AUSTRALIA NEWZEALAND/FOREX