SYDNEY, Dec 6 (Reuters) - The Australian dollar dipped on Tuesday after disappointing local data raised the risk that the economy shrank last quarter, which would be the first time since early 2011, while its New Zealand cousin held firm after bouncing overnight.
The Aussie dollar AUD=D4 had a soft tone at $0.7452, from $0.7477 early, having dipped to a trough of $0.7414 on Monday amid wild swings in the euro.
The Reserve Bank of Australia (RBA) is holding its last policy meeting of the year on Tuesday, and is widely expected to keep interest rates at 1.5 percent for a fourth month, in large part because the economy has seemed more upbeat recently.
Yet figures on net exports and government spending proved softer than expected, leading some analysts to downgrade their forecasts for the third-quarter gross domestic product (GDP) report due on Wednesday. Hanlan, a senior economist at Westpac, reversed his forecast to a 0.2 percent drop in GDP from an initial 0.2 percent increase. That would take annual growth down to 2.1 percent, from 3.3 percent in the second quarter.
The market seems to be assuming the soft patch will be temporary with interbank futures 0#YIB: implying just a 14 percent probability of a rate cut by mid-2017.
The RBA's policy announcement is due at 0330 GMT and all 64 economists polled by Reuters expect an unchanged outcome. AU/INT
"Although we don't expect any further easing from the RBA in this cycle, the risk continues to be that RBA guidance moves from neutral back to an easing bias in the first quarter of 2017," Citi said in a note.
The majority of economists polled by Reuters forecast steady rates until early 2018. Antipodean currencies held near multi-month highs against the yen with the Aussie at 84.70 AUDJPY=R and the Kiwi at 81.15 NZDJPY=R .
The New Zealand dollar NZD=D4 stood tall at $0.7151, having bounced from a trough of $0.7070 on Monday when the country's Prime Minister announced his resignation.
New Zealand Finance Minister Bill English said he planned to stand for prime minister, with national elections due in late 2017. was found at $0.7170 with support around $0.7130.
New Zealand government bonds 0#NZTSY= dipped, sending yields as much as 4 basis points higher at the long end.
Australian government bond futures were near multi-month lows, with the three-year bond contract YTTc1 off 2 ticks at 98.030.
The 10-year contract YTCc1 shed 5 ticks to 97.1900, while the 20-year contract YXXc1 lost 4 ticks to 96.5200.
The spread between 10- and 3-year bonds widened to 82 basis points, from a low of 73 basis points last week. A break above 84 basis points would be the largest spread since September.