The Australian dollar fell to 2-1/2-month lows on Wednesday after a disappointing third-quarter growth report fuelled knee-jerk selling, with firm Chinese manufacturing data offering only brief respite.
* The Aussie dollar shed over half a cent after data showed the economy grew a meagre 0.2 percent in the third quarter as a drag from exports and inventories pulled it short of forecasts for a 0.5 percent expansion.
* The Australian dollar was on the defensive at $0.9553, after slumping to a low of $0.9536, from $0.9602 before the data.
* Support was seen at the Oct 5 low of $0.9541, a break of which could herald a decline to the Sept 24 low of $0.9462.
* Firm Chinese manufacturing data gave the Aussie dollar a brief boost as it assured investors a booming China would continue to suck in Australian commodities.
* Analysts said while the soft domestic data has few policy implications as future growth should still be driven by booming business investment and firm consumption, it does affirm bets the Reserve Bank of Australia (RBA) is no hurry to hike for now.
* Interbank futures show investors are only priced for rates to rise to 5 percent in November 2011, from 4.75 percent now.
* Expectations that Australian rates would not rise any time soon led the three-ten cash yield curve to steepen again to 37 basis points, leaving it at its steepest in 2-½ months.
* The implied cash yield curve steepened too, with three-year bond futures rising further than the 10-year contract. Three-year futures climed 0.03 points to 94.99, and 10-year futures aded 0.01 point to 94.575.
* The New Zealand dollar was briefly dragged to support levels around $0.7400 after the Australian data but quickly rebounded to $0.7415/20. It had touched a two-month low of $0.7398 overnight.
* The kiwi dollar shed 2.6 percent in November, its biggest monthly decline since August. Support seen initially at $0.7400 with $0.7490 likely to cap any rise.
* An embattled euro also weighing on demand for the higher-yielding Aussie and kiwi dollars.
* Euro at 2-1/2-month lows against the U.S. dollar after S&P stirred worries about Europe's debt problems by putting Portugal on negative watch.
* The next key figure to watch is $1.2794, the 61.8 percent retracement of the June to November rally.
* Investors also waiting to see if Shanghai shares would stabilise after tumbling over three percent in inter-day trade on Tuesday.
* Traders said the sharp drop in Chinese stocks was due to banks and brokerages selling shares to raise funds amid tighter monetary conditions.
* Both currencies lower against the yen. Aussie at 79.78, from 80.28 opening level, and kiwi at 61.95 from 62.28 .
* Aussie trims its gains against the euro, which had hit a record low overnight . Aussie edges lower against the kiwi at NZ$1.2875 .http://ibtimes.com
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