WELLINGTON/SYDNEY: The Australian and New Zealand dollars were looking for inspiration on Tuesday, hovering near recent lows as investors were hesitant to large positions with geopolitical tensions still simmering in the background.
The Australian dollar marked time at $0.9262, not far from a two-month low of $0.9239 touched Friday. It was a touch firmer after a stronger-than-expected bounce in the Australian property price index and a survey showing a sharp improvement in business conditions.
Still, Ray Attrill, global co-head of FX strategy at National Australia Bank, was surprised the Aussie didn't rise more, citing persistent selling pressure towards 93 cents.
"We need a bit of recovery in volatility levels," he said. "In the absence of rising geopolitical concerns, we could be drifting around 92 cents, a key level."
The Aussie has not been able to pass the bar of 93 cents since last week's shock jump in Australian unemployment and a downgrade in the central bank's economic growth forecasts.
A break below $0.9239 would test $0.9205/10. Resistance was found at $0.9285/90.
The Aussie held near multi-week lows against the euro and Canadian dollars.
Across the Tasman sea, the New Zealand dollar nudged lower at $0.8443, from $0.8456 in early trade, nearing a two-month trough of $0.8423 hit last week.
The kiwi has retreated from a near three-year high of $0.8839 hit last month, dogged by expectations of a slowdown in the pace of New Zealand interest rate rises and an ongoing tumble in global dairy prices. Support lay at $0.8446, the 50 percent retracement of the kiwi's lowest and highest levels hit so far this year.
Options with strike prices around $0.8450-$0.8445 expiring later in the week could also keep the currency hovering around current levels, while news of an expected rise in quarterly domestic retail sales in data due on Thursday may provide some near-term support.
New Zealand government bonds slipped, sending yields up to 2.5 basis points higher across most maturities.
Australian government bond futures retreated from recent highs, with the three-year bond contract down 4 ticks to 97.360. The 10-year contract eased 2.5 ticks to 96.575, having climbed to its highest in 14 months.
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