SYDNEY/WELLINGTON: The Australian and New Zealand dollars regained ground on Tuesday as suspense grew over whether the US Federal Reserve chief would signal his intention to start tapering the bank's bond-buying programme.
The Aussie dollar rose to $0.9828 by 0557 GMT, from $0.9793 earlier. It had already gained 0.8 percent on Monday, further recovering from a 11-month trough of $0.9711 set last week.
It climbed as high as $0.9836, buoyed by a wave of short-covering on growing expectations Fed Chairman Ben Bernanke may maintain his super easy policy for a while during his testimony to Congress on Wednesday.
Recent comments by other Fed officials have fuelled speculation the US central bank may start to reduce its bond purchases soon.
"Markets are looking forward to Bernanke's speech and they will be very disappointed if they are expecting a change in tune," said David Scutt, a trader at Arab Bank Australia, seeing a rally in Treasury, stocks and risk currencies.
Scutt sees the Aussie rising to $0.9850 this week before returning to parity before the end of the month.
The Australian dollar has taken a beating in May against a stronger US dollar amid signs of an improving US economy.
It has held above parity for most of the past two years.
Immediate resistance was found at $0.9850, having tripped weak stops near $0.9825.
The Aussie showed a muted reaction to the minutes of the Reserve Bank of Australia's (RBA) May policy meeting, at which it cut rates to a record low 2.75 percent.
The RBA said it felt it needed to ease because the economy was still growing at a below-potential pace and inflation was not a threat.
Investors have narrowed the odds of further easing, giving a 14 percent chance of a follow-up rate cut in June, though a move is fully priced in by October.
The New Zealand dollar rose to $0.8200, from $0.8177 in early trade, recovering from a six-month low of $0.8060 on Monday.
Support was seen initially at $0.8140 and below that $0.8110, while sellers are seen lined up above $0.8200.
A survey by the Reserve Bank of New Zealand's quarterly inflation expectations showed respondents seeing a further easing in price pressures, with the two-year outlook at its lowest in nearly 14 years.
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