Aussie dlr drops as bets of steep rate hike trimmed

__________AUSTRALIAN CREDIT/FOREX (0100 GMT) SNAPSHOT__________ FOREIGN EXCHANGE (against previous Sydney close) <AUD=> 0.9143/46 (0.9235/37) <AUDNZD=R>1.2304/16 (1.2250/57) <AUDJPY=R> 83.59/63 (84.71/76) <JPY=> 91.41/44 (91.73/76) <AUDEUR=R> 0.6171/74 (0.6141/44) <EUR=> 1.4812/16 (1.5033/36) DEBT FUTURES CASH YIELDS 90-DAY BILL<YBAc1> (DEC) 95.73 (+0.060) <AU3MBB=RR> 3.70(3.71) 3-YR BOND <YTTc1> (DEC) 95.66 (+0.040) <AU3YT=RR> 5.21(5.29) 10-YR BOND <YTCc1> (DEC) 94.32 (+0.040) <AU10YT=RR> 5.72(5.79) 3/10 SPREAD +0.860 (+0.850) AUST/US 10-YR SPREAD +226(+229) S&P/ASX 200 4736.0 (4753.5) US10-YR <US10YT=RR> 3.46(3.50) __________________________ Oct 28______________________________

DATA: Third-quarter trimmed mean rose 0.8 percent from the earlier quarter, slightly more than a forecast 0.7 percent, while for the year it was up 3.2 percent. The third quarter weighted median was also up 0.8 percent, bang in line with expectations, while for the year it was up 3.8 percent. [ID:nSYD541217] ________________________________________________________________

* The Australian dollar eased and bond futures rallied after measures of underlying inflation favoured by the Reserve Bank of Australia (RBA) did not increase by as much as some had wagered.

* That was taken as lessening the risk the central bank might raise rates by a more aggressive 50 basis points at its policy meeting next week.

* Markets <CSRBA=CSAU> are fully pricing in a 25 basis point hike on Nov. 3 and around a 20 percent chance of a steeper 50 basis point hike. Investors were factoring in around a 30 percent risk of a 50 basis point rise earlier in the day.

* One-year swaps <AUD1YOIS=> fell to 4.65 percent, from a 12-month high of 4.685 percent on Tuesday.

* Shortly after midday, the Aussie was at $0.9143, down from $0.9182 seen late here on Tuesday and $0.9183 just before the data was released.

* The U.S. dollar edged down from two-week highs, but was still holding above the 76 mark against a basket of currencies <.DXY> <=USD>. The U.S. dollar has been on the rebound this week as investors offloaded some of the long positions built in high yielders and the euro <EUR=>.

* Aussie <AUDJPY=R> dropped to 83.59 yen from 84.55 yen late on Tuesday. The yen <JPY=> has made broad gains on the crosses as some of the carry trades funded in the Japanese currency were unwound.

* All eyes are on the U.S. durable goods data for September to provide some indication about spending in the U.S. economy, a day after U.S. consumer confidence slipped back to recessionary levels. [ID:nN27241974].

* There is also an interest rate decision from Norway. It is largely expected to follow the Reserve Bank of Australia in raising rates by 25 basis points. [nLR140734].

* Australian bill and bond futures rallied, on relief the rise in core inflation was likely not large enough to warrant a 50 basis point hike next week.

* Three-year futures <YTTc1> were 0.04 points higher at 94.66 while the 10-year contract <YTCc1> was also 0.04 points higher at 94.32.