* Aussie shade lower but well within recent range
* Australia trade deficit smallest in eight months
* NZ dollar supported as market anticipates higher rates
By Wayne Cole and Naomi Tajitsu
SYDNEY/WELLINGTON, Jan 7 (Reuters) - The Australian dollar was stuck in a very snug trading range on Tuesday as caution ahead of major events offshore this week outweighed an improvement in the country's trade deficit.
The Aussie
Dealers reported good support under $0.8935 and $0.8885 but also plenty of offers around the 90 cent mark, which were likely to keep the currency bottled up for now.
Many investors were reluctant to open new positions ahead of central bank meetings in the European Union and the UK, and always-influential figures on U.S. payrolls later in the week.
Domestic data showed Australia's trade deficit narrowed more than expected to A$118 million ($106 million) in November, the smallest shortfall in eight months.
Exports to China were the second highest on record in the month, though more recent data from the Asian giant has hinted at some slowing in growth there.
The New Zealand dollar
It struck a near six-year high around 86.90 yen
Indeed, swap markets
ANZ currency strategist Sam Tuck said the kiwi would likely rise further in anticipation of the Reserve Bank of New Zealand's tightening cycle. However, its upward momentum could peter out in the second half of the year, should the U.S. dollar begin to appreciate on the back of an improving U.S. economy.
"As long as the U.S. economy keeps growing on current trend, around $0,8500, $0.8600 would be my high for the year," he said. This would be just shy of the 2013 peak of $0.8676.
"If we do get back up to those levels, it will be around the time that the RBNZ starts hiking."
In the near term, the currency faced offers in the mid-$0.8300 region. Technical resistance lay at $0.8314, the 50 percent retracement of its October-November slide, while support lay at $0.8249, its 55-day moving average.
New Zealand government bonds
Australian government bond futures bounced in line with U.S. Treasuries and softness in global share markets. The three-year bond contract
(Editing by Chris Gallagher)
Keywords: MARKETS AUSTRALIA/FOREX