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Aussie & NZ dollars edge up on Singapore surprise

WELLINGTON/SYDNEY, Oct 12 (Reuters) - The Australian and New Zealand dollars inched higher on Friday after Singapore's central bank surprised markets by sounding more upbeat on its economy than many had feared, and skipped a chance to ease policy.

* The decision by the MAS lifted the Singapore dollar while knocking the U.S. dollar down across the board. Singapore also managed to dodge a technical recession with upward revisions to GDP

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

* Aussie likely staying in recent range on the lack of fresh leads, 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, having chalked up 11 pct this week or 22 pct over the past month. The sharp rebound in Australia's top export commodity has supported the currency haunted by worries over a slowing Chinese economy.

* Little direction from Wall street, which finishes flat even as U.S. new claims for jobless benefits slid last week to the 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 IMF seeks 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 index up 0.6 pct, including gold, copper and oil.

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

* Australian government bond futures ease with the three-year contract down 0.040 points at 97.610. The 10-year contract lost 0.015 points to 97.050.

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

* No major data due in Australia, while NZ expects an update on foreign holdings of government debt , which last stood at 58.7 pct in August.

* Looking ahead, NZ expects Q3 consumer price index on Tuesday, with a Reuters poll expecting 0.6 pct rise for the quarter to be 1.1 pct on a year ago. Outcome unlikely to shift analysts' expectations for rate to stay at record low well into next year.

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

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

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

Keywords: MARKETS AUSTRALIA NEWZEALAND/FOREX