WELLINGTON/SYDNEY, Oct 11 (Reuters) - The Australian and NewZealand dollars were firmer against the U.S. dollar while makinggains on the euro following an S&P downgrade of Spain, thoughinvestors were cautious ahead of Australian job data later inthe session.
* Aussie edges up to $1.0235 early, from $1.0220 inlate local trade on Wednesday, having hit a near one-week highof $1.0263 overnight.
* Firmer iron-ore prices also help, upanother 0.4 pct to $117.7 a tonne, bringing gains this week toalmost 13 pct. The mineral has now recouped around half of thehuge fall suffered in July and August, a major relief for minersas it is Australia's biggest export earner.
* But Aussie marking time ahead of crucial job data, withmarkets expecting only a slight gain of 3,750 jobs in September.Jobless rate seen rising to 5.3 pct, from 5.1 pct.
* Anything weaker would add to speculation the Reserve Bankof Australia (RBA) could cut interest rates again next month,following last week's ease to 3.25 pct.
* Interbank futures show around a 60 pct chance ofa move in November and are fully priced for a cut to 3 pct byChristmas.
* Aussie support seen around Oct 9 low of $1.0175, then$1.0150, while sellers lined up around $1.0260, an Oct 10 high.
* NZ dollar holds at $0.8169 early, little changedfrom $0.8166 in late trade. It has ranged between a one-monthlow of $0.8145 and $0.8206 in offshore trade.
* NZ Finance Minister Bill English reiterates that thegovernment budget remains on track to return to surplus in threeyears. Markets have been uncertain about the goal after he didnot specifically repeat the plan in the government's 2011/12financial statement on Wednesday.
* Solid kiwi support around $0.8150 hold, while $0.8190continue to cap the top side.
* Kiwi down 1.6 pct vs the greenback so far this month, vsAussie's 1.3 pct drop. Aussie has narrowed its losses with thepullback in iron-ore prices, even as markets still expect morerate cuts in Australia vs steady rate outlook in NZ.
* That also leads to further buying in the Aussie againstthe kiwi , pushing the pair up 0.4 pct to a two-weekhigh of NZ$1.2545 before steadying around NZ$1.2521. The crosshit a one year low of NZ$1.2361 last week.
* In other markets, the euro dips after S&P downgrades Spaina notch to BBB-, putting it on a par with Moody's, and says maycut further.
* Euro off at A$1.2577 , and at NZ$1.5752.
* Wall Street lost ground, with the S&P 500 down for afourth day, weighed by disappointing news from Chevron and Alcoaas earnings season got under way. The Thomson Reuters-JefferiesCRB index was also down 0.7 pct.
* NZ expects monthly food prices, manufacturing and consumerconfidence survey.
* NZ government bonds start softer, with yieldsup 1 basis point along the curve.
* Australian government bond futures higher with three-yearcontract up 0.010 point at 97.640, and the 10-yearcontract 0.03 point higher at 97.045.
((Australia/New Zealand bureaux)(+61 2 9373 1800/+64 4 8027980))
Keywords: MARKETS AUSTRALIA NEWZEALAND/FOREX