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Aussie & NZ dollars edge up on Singapore surprise

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WELLINGTON/SYDNEY, Oct 12 (Reuters) - The Australian and NewZealand dollars inched higher on Friday after Singapore'scentral bank surprised markets by sounding more upbeat on itseconomy than many had feared, and skipped a chance to easepolicy.

* The decision by the MAS lifted the Singapore dollar whileknocking the U.S. dollar down across the board. Singapore alsomanaged to dodge a technical recession with upward revisions toGDP

* Aussie up around $1.0268, from an early low of$1.0247. It hit a 10-day high of $1.0294 overnight, a solidrecovery from the $1.0149 trough touched early in the week.

* Aussie likely staying in recent range on the lack of freshleads, with $1.0325 capping the topside and support at $1.0240.

* NZ dollar holding at $0.8176, with support at$0.8150 holding for now while sellers lined up around $0.8190.

* Iron-ore prices retreat 1.6 pct, havingchalked up 11 pct this week or 22 pct over the past month. Thesharp rebound in Australia's top export commodity has supportedthe currency haunted by worries over a slowing Chinese economy.

* Little direction from Wall street, which finishes flateven as U.S. new claims for jobless benefits slid last week tothe lowest level in more than four and a half years.

* Euro up on the greenback for the first time in four days,shaking off the impact from Spain's downgrade while the IMFseeks more time for euro zone economies to cut budget deficits.

* Euro steady around A$1.2590 , and at NZ$1.57806, as the Thomson Reuters-Jefferies CRB indexup 0.6 pct, including gold, copper and oil.

* Elsewhere, markets eye Chinese lending data, euro zoneindustrial production and U.S. producer prices.

* Australian government bond futures ease with thethree-year contract down 0.040 points at 97.610. The10-year contract lost 0.015 points to 97.050.

* Aussie/kiwi steady around NZ$1.2553, havingbeen lifted to NZ$1.2573 on Thursday by Australian job data andfurther away from a one-year low of NZ$1.2361 struck last week.

* No major data due in Australia, while NZ expects an updateon foreign holdings of government debt , which laststood at 58.7 pct in August.

* Looking ahead, NZ expects Q3 consumer price index onTuesday, with a Reuters poll expecting 0.6 pct rise for thequarter to be 1.1 pct on a year ago. Outcome unlikely to shiftanalysts' expectations for rate to stay at record low well intonext year.

* In contrast, markets pricing implies 12 pct chance of aRBNZ rate cut on Oct 25, and a 76 pct chance of a rate cut overthe next 12 months.

* NZ government bonds firmer, with yields 2.5 bpslower across the curve.

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

Keywords: MARKETS AUSTRALIA NEWZEALAND/FOREX