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Australia, NZ dlrs steady after slide, global gloom adds to easing case

SYDNEY, Oct 29 (Reuters) - The Australian and New Zealand dollars were picking up the pieces on Thursday after taking a beating overnight when coronavirus shutdowns in France and Germany spooked investors out of growth-sensitive assets globally.

The Aussie was taking stock at $0.7066, having shed 1.1% overnight to leave behind a peak of $0.7157. Still, it did manage to edge up from a trough of $0.7038 thanks to a bounce in U.S. stock futures.

It also avoided a break of major chart support at $0.7021, which would have been very bearish technically, but needs to get back above $0.7115 to be on firmer footing.

The kiwi dollar steadied at $0.6652, after falling 1.1% overnight from a top of $0.6720. It found support around $0.6630 but faces immediate resistance at $0.6660.

Both currencies had been sideswiped by a classic rush for safety as surging COVID-19 cases forced economic shutdowns that threatened market hopes for a global recovery.

While New Zealand and Australia have been relatively successful in containing the virus at home, both rely heavily on commodity exports leveraged to global activity.

“There is a high risk of a double-dip recession in the Eurozone because governments are reinstating broad-based lockdown measures,” said CBA economist Kim Mundy. “A weaker global economic backdrop will support USD.”

“The risk is still that AUD falls below $0.70 in the coming days.”

Bonds drew some safe haven support from the angst, with three-year futures marching all-time highs at 99.845 before edging back a touch to 99.835.

The renewed threat to world growth only adds to the case for further easing from the Reserve Bank of Australia (RBA) at its November policy meeting next week.

Markets have already largely priced in a cut in rates to 0.1% and a similar target for three-year bond yields, though there is less certainty about how much bonds the central bank might commit to buying as part of QE.

A Reuters poll produced a median forecast of around A$100 billion ($71.29 billion) in five- to 10-year bonds, though some analysts argued the RBA would avoid fixing itself to one number. 1.4027 Australian dollars) (Editing by Kim Coghill)

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