Australian dlr eclipsed by data, bonds light up

* Aussie at one-month lows vs USD, bond futures rally

* Euro leaps 1.7 pct in 24 hrs vs Aussie

* Kiwi caught in the downdraft

By Mantik Kusjanto and Cecile Lefort

WELLINGTON/SYDNEY, Oct 3 (Reuters) - The Australian dollar slumped on Wednesday as a shock widening in the country's trade deficit stoked speculation of more cuts in domestic interest rates, driving bond yields to two-month lows.

The Australian dollar skidded to $1.0206, its lowest since Sept 6, having easily knocked out options at $1.0250. Charts show a break below $1.0200 opens the way to $1.0165, the September trough.

The Aussie has lost a cent and a half since the Reserve Bank of Australia (RBA) cut rates by 25 basis points to 3.25 percent on Tuesday, citing a darker global background, falling export prices and a high currency.

"I am pitching the AUD to break the low in September and put a major dint in the theory that it is ever-resilient to the global commodity cycle," said Greg Gibbs, a strategist at Royal Bank of Scotland in Singapore.

The strength of the Aussie has confounded many analysts given the recent steep fall in some key resources prices.

The economic impact of lower export prices was all too clear in Australia's trade deficit which blew out to A$2 billion in August, its widest in three-and-a-half years and far larger than forecast .

That fed expectations of more rate cuts with interbank futures showing a two-in-three chance of an easing in November and rates of 2.55 percent by March. Overnight indexed swaps

indicate a cash rate of 2.65 percent in 12 months.

The Aussie slipped across the board, with the euro stretching its legs to A$1.2632 , its highest since mid-June. It tripped stops above A$1.2610 and was now eyeing A$1.2761. The euro has gained 1.7 percent in 24 hours as the RBA rate cut forced heavy short-covering.

The Aussie was nursing hefty losses against the yen, sterling and Swissy, but managed to recoup some very modest ground against the kiwi. It was last at NZ$1.2423 , having slid to NZ$1.2361, its lowest in more than a year.

The Aussie has lost five percent since touching a seven-month high in late July as the prospect of more easing in Australia contrasted with New Zealand's steady rates outlook.

"At the moment, the kiwi is just being re-rated from what I would call exceptionally cheap to being cheap," said ANZ Bank chief economist Cameron Bagrie.

"If it starts to move into expensive territory then the Reserve Bank (of New Zealand) is going to get a bit of a problem," he said, pointing to the A$0.85 level, or around NZ$1.17. Australia is New Zealand's single biggest export market.

The New Zealand dollar got caught in the Aussie downdraft, slipping to a one-week low of $0.8215, down 1.5 percent from Tuesday's peak.

The kiwi was likely to test $0.8184, the lows on Sept. 24 and 26, with $0.8295 capping the top side.

Adding to investors' caution was also a small dip in the latest dairy auction, with prices falling for the first time in two months.

The prospect of lower cash rates, saw Australian government bond futures rally to two-month highs with the three-year contract jumping to a peak of 97.750.

Likewise, the 10-year contract rose as far as 97.190. Dealers now had their eyes set on the July peak at 97.340, and even the all-time high of 97.360.

Yields on Australian 10-year cash bonds fell to 2.92 percent, the lowest since late July, making it cheaper for the government to borrow for a decade than for banks to borrow overnight.

New Zealand government bonds gained, sending yields 3.5 basis points lower across the curve.

((Australia/New Zealand bureaux)(+61 2 9373 1800/+64 4 802 7980))