SYDNEY (Reuters) - The Australian and New Zealand dollars were fighting a rearguard action on Wednesday as a shakeout in world stock markets sent investors to the shelter of the Japanese yen and U.S. Treasuries.
Earnings jitters had slapped the S&P 500 <.SPX> down over 2 percent at one stage on Tuesday before a late bounce pared the losses to 0.55 percent. [.N]
The Aussie <AUD=D3> was hanging on at $0.7093, after finding last-gasp support around $0.7055. That helped prevent a punishing break of the recent 32-month trough at $0.7041, which likely would have unleashed a wave of momentum selling.
The safe-haven trade was also expressed against the Japanese yen with the Aussie sliding as far as 79.00 when Wall Street was at its worst, before steadying at 79.80 <AUDJPY=>.
The New Zealand dollar <NZD=D3> was trading flat at $0.6552, sandwiched between support at $0.6535 and resistance around $0.6568.
"The ongoing geo-political factors affecting the market continue to be, well, ongoing," said Nick Twidale, COO at Rakuten Securities.
"Risk currency pairs continue to trade to the downside in line with the general market sentiment and the greenback remains attractive as a safe haven."
Investors were now on watch for the European Central Bank meeting later in the day and its assessment of the balance of risks given Italy's budget problems and trade tensions with the United States.
At home, a survey showed activity in Australia's manufacturing sector picked up early in October even as the service sector slowed.
The Commonwealth Bank/Markit flash manufacturing PMI picked up to 54.3 this month, from a final 54.0 in September, but the services PMI fell to 50.8, from 52.2.
Both, however, showed strength in hiring that augured well for a further decline in the unemployment rate.
Australian government bond futures edged higher, with the three-year bond contract <YTTc1> up half a tick at 97.910. The 10-year contract <YTCc1> rose 1.5 ticks to 97.3250.
New Zealand government bond yields <0#NZTSY=> dipped 1 to 2 basis points.
(Editing by Shri Navaratnam)
