Australia, NZ dlrs mark time for Fed, domestic data tests

By Wayne Cole

SYDNEY, March 19 (Reuters) - The Australian and New Zealand dollars marked time on Tuesday as investors counted down to what is expected to be an accommodative U.S. policy meeting, while domestic events added to the chance of stimulus at home.

The Aussie dollar was steady at $0.7102, having touched a two-week top of $0.7120 on Monday only to run into stiff resistance. Immediate support is found at $0.7090/7100.

The kiwi dollar was steady at $0.6853 and corralled between support at $0.6809 and resistance around $0.6874.

Their U.S. cousin has been pressured by speculation the Federal Reserve will end its policy meeting on Wednesday by abandoning forecasts for rate hikes this year.

Yet markets are also aggressively wagering on rate cuts in both Australia and New Zealand that will make it hard for the Aussie and kiwi to sustain a major bounce.

Minutes of the Reserve Bank of Australia's (RBA) March policy meeting out on Tuesday showed the outlook for policy was evenly balanced with the impact of sliding house prices a major source of uncertainty.

Figures on Tuesday showed home prices fell 2.4 percent in the December quarter, wiping A$133 billion off values.

The futures market is almost fully priced for a quarter point cut in the 1.5 percent cash rate by August.

Much will depend on whether employment can stay resilient, underlining the significance of the February jobs report due out on Thursday.

"Labour market data will be key to resolving the tension in the economic data over the coming months and our view is that it will show a weakening labour market, triggering the RBA to cut rates to 1 percent," said NAB economist Kaixin Owyong.

"This makes the labour force survey particularly important, where we expect unchanged employment with the risk that the unemployment rate ticks up to 5.1 percent."

The median forecast is for a rise of 14,500 in employment and a steady jobless rate of 5.0 percent.

For New Zealand, the key test will be data on gross domestic product, also due on Thursday, where analysts look for growth to improve to 0.6 percent after a weak third quarter.

Australian government bond futures extended their recent gains to reach heights last visited in late 2016. The three-year bond contract added 4 ticks to 98.545, while the 10-year contract firmed 3.5 ticks to 98.0500.

Yields on New Zealand government bonds fell 2 to 3 basis points to be near the lowest on record. (Editing by Kim Coghill)

2019-03-19 04:42:29

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