Aussie & NZ dollars trim losses, still on defensive

WELLINGTON/SYDNEY, Oct 9 (Reuters) - The Australian and New Zealand dollars recovered a bit of ground on Tuesday as investors took profits on short positions built against the euro and sterling, though the mood remained defensive.

* Aussie up at $1.0231, from $1.0196 early, boosted by short-covering following a fall to $1.0149 on Monday, its weakest since mid-July.

* Traders cite model funds buying in the past 24 hours with real money investors ready to sell rallies towards $1.0250/80.

* Aussie still looking vulnerable, with daily moving average studies pointing lower. A dealer said only a break above $1.0280 might suggest a stronger recovery under way. Support found at $1.0150, an Oct 8 low.

* NZ dollar nudges up around a quarter of a cent to $0.8210 on some buying and gains on cross rates, after hitting a one-month low of $0.8150 overnight.

* Kiwi still likely to struggle to achieve any sustained move higher. Sellers seen lined around 10-day moving average at $0.8240 and then 20-DMA at $0.8251. Support at Monday's low at $0.8150 and below that Sept 10's high of $0.8134.

* Aussie has fallen around 1.4 pct so far this month vs its U.S. counterpart and 2.5 pct against the euro, weighed by a rate cut by the Reserve Bank of Australia (RBA) last week and the prospect of more easing on a cloudy Chinese outlook.

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

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

* Focus on a speech by RBA Deputy Governor Philip Lowe at 0140 GMT on "The Labour Market, Structural Change and Recent Economic Developments".

* It may address the unusually sharp drop in the participation rate seen in the last year which has helped keep unemployment low at 5.1 pct even though jobs growth has been sluggish.

* Australian business conditions weakened in September as retailers and wholesalers suffered from slack demand, while inflationary pressures remained subdued, adding to the case for further cuts in interest rates.

* Antipodeans trim hefty losses against euro. Euro at A$1.2692 , having climbed to a four-month high of A$1.2824 last week, and NZ$1.5810 , off a peak of NZ$1.5931.

* The Antipodeans claw back lost ground against the yen, with the Aussie last at 80.07 yen AUDJPY=R>, having slipped to an overnight low of 79.34 yen, lowest since June 28. Kiwi bounces back to 64.23 yen from a three-week low of 63.49 yen .

* New Zealand data offers a mixed but slowing outlook. Closely followed think tank's quarterly survey of business confidence headline moves back into black but the components point to a slowing in growth in the second half of the year.

* A partial NZ retail sales indicator shows a dip after the previous month's stellar rise, with the rate of growth evident earlier this year starting to slow.

* NZ government bonds turn flat after opening firmness.

* Australian government bond futures also softer with three-year contract down 0.010 points at 97.630, as was the 10-year contract at 97.015.

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