Australia, NZ dollars back away from resistance, data a drag

By Wayne Cole

SYDNEY, June 3 (Reuters) - The Australian and New Zealand dollars backed away from resistance on Tuesday as soft economic data encouraged profit-taking on an overnight surge, while nudging short-term yields lower.

The see-saw action left the Aussie down 0.4% at $0.6468 , unwinding some of Monday's 1% rally to $0.6500 that came amid a broad tariff-inspired sell off in the U.S. dollar.

This is the fourth time since early May that the Aussie has failed to sustain a push past $0.6500, leading speculators to play the range and making it a self-reinforcing barrier.

The kiwi dollar did briefly breach its recent top to reach a six-month high of $0.6054, before profit-taking pulled it back to $0.6013. Still, a finish above $0.6000 would be bullish for a sustained rise to the $0.6120/45 zone.

The Aussie hit a further hurdle when data showed net exports and government spending both dragged on economic growth last quarter, pointing to a very sluggish start to the year.

Figures on first-quarter gross domestic product are due on Wednesday and are expected to show only modest growth of 0.4%, with even that in doubt now.

"We have lowered our GDP forecast to 0.2% quarter-on-quarter, from 0.5%." said Taylor Nugent, a senior markets economist at NAB.

He noted consumer spending had again undershot forecasts and there was little sign of the pick up long expected by the Reserve Bank of Australia.

"Our view remains that the RBA will ease away from restrictive settings reasonably quickly in order to sustain healthy labour outcomes amid a fragile recovery in consumption growth and offshore headwinds," Nugent added. "We expect rate cuts in July, August and November to 3.1%."

The central bank last cut by a quarter point to 3.85% in May, and minutes of that meeting showed they seriously considered easing by an outsized 50 basis points given global risks stemming from U.S. tariffs.

Markets imply around a 77% chance the RBA will ease again at its next meeting on July 8, and that rates will reach 3.10% or lower by early next year. "The July meeting is 'live' given the discussion in the Minutes and we expect it will come down to the data flow between now and then," said Belinda Allen, a senior economist at CBA. "We continue to expect two more rate cuts this cycle and favour an August and September cut," added Allen.

(Reporting by Wayne Cole)