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UPDATE 1-Australia dlr dented by soft data and RBA, NZD steady

Published 06/12/2016, 03:21 pm
Updated 06/12/2016, 03:30 pm
© Reuters.  UPDATE 1-Australia dlr dented by soft data and RBA, NZD steady
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(Updates with RBA policy meeting outcome)

SYDNEY, Dec 6 (Reuters) - The Australian dollar dipped on Tuesday after the Reserve Bank of Australia kept rates on hold at its monthly policy meeting, but sounded cautious on economic growth after a run of soft data pointed to a possible contraction last quarter.

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) kept, as expected, its cash rate at a record low of 1.5 percent in its last policy meeting of the year, noting that the annual pace of growth was set to slow. statement highlighted a mixed economy with caution around labour, growth and inflation," said Su-Lin Ong, a senior economist at RBC Capital Markets.

"There is a mild easing bias, though it's not likely to be exercised soon," she added, forecasting a 25 basis-point cut in the second quarter of next year.

Interbank futures 0#YIB: implied a probability of 22 percent for a cut by mid-2017, up from 14 percent before the RBA decision.

Earlier in the session, figures on net exports and government spending proved softer than expected, leading some analysts to downgrade their forecasts for third-quarter gross domestic product (GDP) 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 Antipodean currencies held near multi-month highs against the yen with the Aussie at 84.82 AUDJPY=R and the kiwi at 81.15 NZDJPY=R .

The New Zealand dollar NZD=D4 held steady at $0.7139, having reversed earlier gains. Yet, it was still some way off a trough of $0.7070 set 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 1 tick at 98.040.

The 10-year contract YTCc1 shed 2 ticks to 97.2200, while the 20-year contract YXXc1 lost 1.5 ticks to 96.5450.

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.

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