Australia, NZ dollars firm as French fallout pressures euro

The kiwi dollar stood at $0.5665, after edging up 0.1% overnight. Major support lies at the recent 17-month low of $0.5566, with resistance at $0.5675 and $0.5750. The next domestic hurdle for the Aussie will be an appearance by Reserve Bank of Australia Deputy Governor Andrew Hauser on Wednesday where he is likely to field questions about the chance of a fifth hike in rates this year. Speaking on Monday, the RBA's head of financial markets acknowledged that the labour market might be loosening a little faster than expected, but also highlighted the importance of third-quarter consumer price data due on October 28.

Analysts see a risk core inflation could rise a hefty 1.0% in the quarter to keep the annual pace at 3.6% and well above the RBA's target range of 2% to 3%. Indeed, analysts at Westpac think core inflation could also rise by a chunky 0.9% this quarter, putting annual inflation at 3.5% compared to the RBA's forecast of 3.3%. Central bank officials will have an opportunity to respond live to the Q3 numbers as Governor Michele Bullock and her team are appearing before lawmakers on the same day and at almost the same time.

Markets imply a one-in-three chance of a hike in the 4.60% cash rate in November, rising to 56% for December. Also on October 28, the Reserve Bank of New Zealand will announce whether it is lifting rates for a third time this year, with investors pricing in an 89% probability of a quarter-point move to 3.0%. Markets also imply rates could reach 3.75% or more next year, far above the RBNZ's own projection of 3.20%. (Reporting by Wayne Cole; Editing by Stephen Coates)